Patrice Guillotreau, University of Nantes, France Rémi Mongruel, Ifremer Brest, France Ramòn Jiménez-Toribio, University of Huelva, Spain The tuna canning oligopoly and the European market: Implication for the fisheries The challenge of change: Managing for Sustainability of Oceanic Top Predator Species, NSF, Santa Barbara, 12-14 April 2007

Content Concentration in the tuna industry Horizontal market integration (frozen and canned ; skipjack and yellowfin) => Jeon et al. 2007 ; Squires et al. 2006 Price-cost margins of the canneries Market power and implications for the fisheries?...

Global market 1. Market and concentration of the tuna industry CR4 41% 46% CR10 62%

Concentration in Europe CR4 43% CR5 50% CR10 72% CR4 US = 80%

Number of canneries and trade of canned products in France (1822-2005) Second sardine crisis 1902-1911 World war I 1914-1918 World war II 1939-1945 First sardine crisis 1880-1887 Discovery of gold mines in California 1848-1853 Exploitation of tropical tuna fishery 1957 - … Number of canneries and trade of canned products in France (1822-2005)

EU fleet (89 purse seiners) The EU supply chain 2003 (source : Oceanic Dev.) Atlantic 24 vessels EU fleet (89 purse seiners) France and Spain Indian 48 Taiwan, South Korea, Japan, Mexico, US,… Pacific 17 Imports Traders Latin America 40% Seychelles 11% Asian & American canneries 290 kT Seychelles 31% Cote d’Ivoire 19% Ecuador 46% Colombia 19% ACP canneries Loin plants abroad South Am., Thailand… EU Loin plants Spain, Portugal… Thailand 13% Philippines 12% Ecuador 10% Seychelles 15% Côte d’Ivoire 12% Italy 46% Spain 38% 78 kT 5 kT 191 kT EU canneries 339 kT 346 kT Spain 84% Italy 10% 17 kT EU market (supermarkets) UK 34% France 22% Germany 17% Export markets 685 kT

2. Horizontal market integration YELLOWFIN 2.1 Raw tuna 1995-1 : 2005-12 2.1 Raw tuna All series I(1,0) or so (JP) All series bivariately cointegrated at the 5% level THAILAND FRANCE JAPAN SPAIN-10 ITALY Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) SPAIN+10

SKIPJACK 1995-2 : 2002-8 Every series bivariately cointegrated at 5% but Japan with Thailand and Americas THAILAND JAPAN AMERICAS SPAIN Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate)

SKIPJACK AND YELLOWFIN 1995-1 : 2005-12 JOHANSEN PROCEDURE : All series bivariately cointegrated at the 5% level Multivariate cointegration : 3 models indicate cointegration at the 5% level with consistent Trace and Max E.V. tests : 1) Yellowfin (Thailand-France-Italy-Spain) and Skipjack (Spain) 2) Yellowfin (France-Italy-Spain) and Skipjack (Thailand-Spain) 3) Yellowfin (France-Italy) and Skipjack (Thailand-Spain) LOP does not hold when Thailand SJ is included All causalities are bidirectional in the mutlivariate models

SKIPJACK AND YELLOWFIN 1995-1 : 2005-12 THAILAND SJ YF ITALY YF YF FRANCE Legend: Granger causality LOP 5% (bivariate) LOP 5% (multivariate) SJ YF SPAIN

YELLOWFIN 2.2 Canned tuna

SKIPJACK

Canned tuna market (horizontal) Price series SJ France (dry) retail price Ivory Coast (oil) export to France UK (dry) import from Thailand Germany (oil) import from Philippines Italy (oil) import from Spain Bivariate cointegration LOP: IC-UK and IC-Ger. Causality: Bi. and G=>IC YF No cointegration Multivariate cointegration SJ: UK-Germany-IC (but no LOP at 5%)

3. Price-cost margins of the canneries SKIPJACK All pairwise series cointegrated (bivariate tests) Dual Granger causality in all cases 2 proportional (Germany) and 2 non-proportional (UK) Canned (dry) UK – Frozen Thailand Canned (dry) UK – Frozen Spain Canned (oil) Germany - Frozen Thailand Canned (oil) Germany - Frozen Spain Example: LCSJ-GERMANYt - 0.88*LSJ-SPAINt - 0.86 = et LCSJ-UKt - 0.52*LSJ-BANGKOKt - 0.99 = et YELLOWFIN Canned (dry) France – Frozen Italy Canned (dry) France – Frozen Spain Canned (dry) France – Frozen Thailand Canned (oil) Italy – Frozen Italy Canned (oil) Italy – Frozen Spain Canned (oil) Italy – Frozen Thailand None cointegrated (bivariate tests) No Granger causality No proportionality

4. Market power, so what ?... Retail France dry YFT Spain-Italy dry YFT Abidjan oil SJ UK dry SJ German-Bangkok oil SJ Price-cost margins of canned tuna sold in Europe

Key results: . Skipjack and yellowfin markets are cointegrated Yellowfin is the leader market European canned tuna markets are not so well integrated spatially, except skipjack (caused by US !) Raw tuna prices are better transmitted by the canning industry for skipjack than for yellowfin Margins of canneries and retailers are fairly stable for skipjack and increase for yellowfin

Conclusion Consequences of the Yellowfin leadership? Competitive supply-side => race for fish Potential market power on the demand side => affect the consumer surplus (double marginalisation). No impact on the fishing industry? Next step: testing for market power with an I.O. structural model (e.g. Bresnahan-Lau)