Federal fisheries regulators have opted to let other federal agencies determine whether the merger of two Japanese firms would create various forms of economic distress in Alaska fisheries.
The North Pacific Fishery Management Council was asked April 2 in Anchorage to analyze impacts on several communities, pricing and ownership caps on various privatized fisheries that could come as a result of the forthcoming merger of Maruha Group and Nichiro Corp.
The council decided that some analysis to be done by the U.S. Department of Justice and the Federal Trade Commission would be sufficient, said Earl Krygier, an alternate on the council for Fish and Game Commissioner Denby Lloyd.
Krygier, who made the proposal, said the state's concern was for the communities and the fisheries managed under the council process. “We thought it would be useful for us at future actions of the council to know what might happen with such a merger,” he said.
According to Maruha Group, Japan's largest seafood producer, its merger with a smaller competitor, Nichiro Corp., will be completed Oct. 1. Maruha first announced plans for the merger in Tokyo in early December. The new entity will be known as Maruha Nichiro Holdings Inc.
Maruha's Westward Seafoods, with processing facilities in Dutch Harbor and near Anchorage, processes several species of fish and crab, fishmeal, fish oil and surimi. Nichiro's Peter Pan Seafoods, with plants in King Cove, Dillingham, Valdez and Port Moller, processes salmon, several other species of fish and crab, as well as fishmeal, fish oil, salmon oil, surimi and surimi seafood.
Sam Cotton, a commercial fisherman and consultant for the Aleutians East Borough, said the borough doesn't want to suggest opposition to the merger, but does have concerns.
“I was disappointed,” Cotton said. “I felt the council and its staff have special expertise that the FTC and anti-trust division of the Department of Justice don't have. I think (the council) would add insight that might be lacking at anti-trust or the FTC.
“The other issue is pollock pricing, which affects the industry and the state of Alaska,” Cotton said. “As you reduce the number of buyers, it has the potential affect on competition.”
There is also the crab issue. Crab rationalization — a federal plan privatizing that fishery, which went into affect less than two years ago — makes it more difficult to transfer processor shares between owners, Cotton said. “But what if it's the same owner? It appears it would be easier to transfer (processor shares).”
Assuming the merger goes through, the new company would own 36.5 percent of the processor share of red king crab, and the cap on processor share ownership is 30 percent. “The new company would have to do something to stay under that cap, and we are not sure what they would do,” Cotton said. The concern is they might try to divest the amount above the 30 percent cap from the King Cove fishery, which would have damaging effects on the local economy, he said.
Brent Paine, executive director of United Catcher Boats, a Seattle-based organization of groundfish harvesters, said some boat owners are concerned that through lack of competition they will lose their ability to bargain fairly for the price of their fish.
“On the other hand, the fishermen and processors who have dealt with international companies for many years for sources of capital don't see a problem in doing joint ventures along with Japanese companies to increase their production and become more efficient,” Paine said. “They are looking at this as an opportunity.”
Maruha Corp. is one of 168 companies in the Maruha Group. Westward has the capability to process 65,000 metric tons of seafood annually. The Japanese-owned, Seattle-based company was founded in 1991. Through its affiliated businesses, Maruha is also involved in sales of a wide range of products, from seafood and canned food to flavorings, health food, pharmaceuticals and cosmetics.
Nichiro, founded in 1914 as Nichiro Fishery Co., has 29 subsidiaries and five affiliates. Its main area of business is manufacturing and sales of processed foods, as well as harvesting, purchasing and selling marine products. The company is also in the cold storage business, manufactures and sells packing and packaging machines, and operates the Hakodate Kousai Hotel, an upscale hotel in Japan.
Margaret Bauman can be reached at
margie.bauman@alaskajournal.com.
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