NEWS ANALYSIS: Norway’s huge fish-farming industry has become almost as controversial as the country’s oil and gas. Salmon producers in particular have long been accused of endangering wild salmon, but now Norwegian media have also reported how some fish hatcheries have polluted fjords while fish farms have neglected fish welfare. This week six of Norway’s major salmon producers also found themselves facing charges of collusion lodged by the European Commission.
Norway is home to the world’s largest salmon producers and the EU is their biggest market. On Thursday, EU competition authorities sent out a “Statement of Objections” to six Norwegian salmon producers including Lerøy, Mowi, SalMar, Cermaq, Grieg Seafood and Bremnes. All are suspected of having “breached EU antitrust rules by colluding to distort competition in the market for spot sales of Norwegian farmed Atlantic salmon in the EU.”
It’s a serious “preliminary” charge, rooted in the belief after a lengthy investigation that the six companies “exchanged commercially sensitive information” between 2011 and 2019. They’re accused of sharing sales prices, volumes and production capacity “as well as other price-setting factors,” in an alleged effort “to reduce normal uncertainty in the market for spot sales (as opposed to long-term contract sales) of Norwegian farmed Atlantic salmon into the EU.”
The producers’ allegedly “anti-competitive conduct,” which they all quickly denied, applied only to sales of fresh, whole and gutted salmon produced in Norway, not any frozen or processed salmon products such as filets, loins or smoked salmon. The suspected sales, however, accounted for nearly 80 percent of all the farmed Atlantic salmon exported from Norway.
The Danish executive vice-president of the European Commission in charge of competition policy, Margrethe Vestager, issued a statement stressing how competition “is essential to ensure that consumers have access to food at affordable prices. We are concerned that six salmon producers exchanged commercially sensitive information with the aim to limit competition on the market, to the detriment of European customers.”
If the European Commission concludes, “after the parties have exercised their rights of defense,” that the Norwegian producers have violated competition law, they can be hit with fines of up to 10 percent of each company’s annual revenues. Financial analysts in Norway estimated that can amount to billions of kroner in fines, prompting investors to quickly sell off shares. Mowi’s share price fell by 4.3 percent on Thursday, while Lerøy dove by 5.9 percent and Grieg Seafood by 7.6 percent. Salmar was down 2.4 percent.
The four stocklisted companies ended up with a market value loss of around NOK 7.5 billion, reported newspaper Dagens Næringsliv (DN), while looming fines can amount to as much as NOK 13 billion (USD 1.25 billion) if based on last year’s revenues, or NOK 8.3 billion if based on their revenues in 2019 when the alleged anti-competitive conduct is believed to have ended.
“The companies don’t think they’ve done anything wrong, but the market braced for a worst-case scenario now,” Alexander Aukner, an analyst at DNB Markets, told DN. Another analyst, Herman Aleksander Dahl at Nordea Markets, described the potential fines as “quite enormous.”
All the salmon producers targeted firmly deny any collusion, with Mowi “denying the commission’s preliminary evaluation” and adding that it “strongly believes there has not been any violation of competition rules.” Salmar also disagreed with the Commission’s charges, as did all the others, and they signalled both a formal response and ongoing cooperation with the Commission’s investigation.
The EU’s charges and looming fines pose the latest challenge to Norway’s fish-farming industry, which has created huge personal fortunes, a bounty of salmon that once was an expensive delicacy and lots of jobs along the Norwegian coast. The economic development from fish farming in remote areas has made it vitally important and a powerful factor in both local and national politics.
At the same time, however, salmon production has long generated criticism and concern regarding its impact on the environment and the future of traditional fishing. Complaints about fish-farming first surfaced years ago, mostly because of disease that spread from farmed fish to Norway’s wild salmon. That’s blamed for dramatically reducing Norway’s wild salmon stocks, which fell to their lowest level ever last year.
Those who’ve been trying to save wild salmon call it a “dramatic” situation “for everyone who cares about Norwegian nature,” Torfinn Evensen told Norwegian Broadcasting (NRK) this week. Evensen is secretary general of the national organization trying to protect Norway’s rivers where salmon was once plentiful. He points to a “united research milieu” that believes fish-farming poses the single greatest threat to wild salmon.
The fish-farming industry has long defended itself against such charges and has recently gone on the offensive as well, with companies like Grieg Seafood claiming on its own website (external link) that it’s “rooted in nature” and dedicated to producing “healthy seafood” while reducing its “footprint and improving fish welfare.” Several companies also argue that they’re sustainable, with Mowi and others pointing to a a high international ranking among sustainable protein producers that professors have disputed. “That just can’t be understood,” Trygve Poppe, a professor specializing in fish disease at Norway’s veterinary college, told DN. “These companies have enormous challenges with everything from polluting to poor fish welfare … and how can you get a good emissions score when your fish-feed ingredients are shipped in from Brazil and a large portion of your fish are flown out to their markets?”
Fish-farming has most recently been generating headlines in Norway like never before. Its alleged offenses have raised so much concern that they were among the first thing the country’s new government minister in charge of fisheries, Cecilie Myrseth, tackled when she took over last autumn. “We’ve had many examples that industry players aren’t following laws and regulations that apply,” Myrseth told DN in November, when she called a meeting of both industry representatives and state regulators. She referred to “situations” that also have involved “lots of dead fish … and we can’t have that.”
It was DN that initially made a splash in September with an extensive report, complete with underwater documentation, about how several fish hatcheries were spewing untreated sewage, fish excrement and sludge straight into the fjords where they were located. Aleksander Nordahl, an acclaimed photographer who also dives, was among those on DN‘s team of journalists who could provide unique photos and video of what’s been going on below the surface of otherwise scenic Norwegian fjords from the famed Hardanger to Trøndelag and beyond.
DN also reported an alarming lack of inspections, not least after the state transferred responsibility to local county governors and their agencies. When inspections were made, irregularities or violations were found at fully nine of 10 hatcheries, often involving rules for waste disposal.
The photographic evidence (external link to DN, in Norwegian) sparked a sharp response from top politicians in Oslo and several Members of Parliament. Some called it “shocking.” Others said it was “a catastrophic mystery” how such violations could occur in a country better known for lots of regulation. Kjersti Bjørnstad, a state secretary in the government ministry in charge of climate and the environment from the district-friendly Center Party, agreed the photos were “disturbing” and stressed that “polluting is the polluter’s responsibility.” She vowed to “take the initiative” to confront those responsible.
Several other politicians in opposition also reacted strongly to what some called the “ugly photos” published in DN, and environmental organizations were disgusted. Karoline Andaur of WWF called it “incredible” that such sludge could run “right into Norway largest natural treasures for years without being stopped.” Frode Pleym, head of Greenpeace in Norway, also decried how some fish farming was spoiling “clean and beautiful fjords that are central to the marketing of Norway abroad.”
Local officials also rang alarms and within weeks the county governor for Vestland in Western Norway, where the Hardanger Fjord is a prime tourism magnet, was also voicing concern. The leaders of the Greens and Socialist Left parties called for a halt to the granting of any new fish-farming licenses.
The leader of the Norwegian Seafood Federation (Sjømat Norge), however, still thinks the condition of the Hardanger Fjord is “in general, good.” Geir Ove Ystmark referred to a report from the ocean research institute Havforskningsinstituttet and later criticized DN‘s reporting as being agenda-driven and motivated by a need for more “clicks” on its website.
By late November, though, after more news had also emerged about terrible treatment, infection and the deaths of fish in some production facilities, Ystmark apologized for various “isolated incidents” in the industry when called in to the new fisheries minister’s meeting. He’d had to face statistics from the state veterinary institute that 92.3 million salmon and 5.6 million rainbow trout had died in Norwegian production facilities in 2022 alone.
“The main point is that we have a very good product (salmon) that has done well in the market,” he said at the meeting. “We need to avoid too many of these incidents.” He noted how farmed fish escaping from their confined areas of fjords called merder was the big problem in the early 2000s, “but we worked systematically with courses and attitudes and so came new standards. The result is that the numbers of fish escaping has fallen considerably.”
He attributed a still-high death rate of 16.1 percent in 2022 to “illnesses, injuries after treatment to ward off fish lice and structural problems where some production facilities are too close together.” Efforts are underway, he claimed, to ward off illness.
Fisheries Minister Myrseth, worried about Norway’s reputation abroad, made it clear that the fish-farming business needs to shape up, not least after some newspaper commentators began questioning “whether we should still eat salmon.” Joacim Lund, writing in newspaper Aftenposten, noted how last autumn’s “steady stream of scandals” raised doubt among consumers, and not just in Norway. There have also been recent protests and even lawsuits against Norwegian-owned salmon farming operations in Iceland, Scotland and, earlier, Alaska and Chile, where unhappy local fishermen even confronted the Norwegian king and queen during a visit.
After Mowi took over a production facility from Salmar in Iceland, meanwhile, millions of fish escaped from it, launching a police investigation. Then came reports of a major increase salmon lice, prompting Icelandic performing artist Björk to accuse both Mowi and SalMar of destroying marine life and plants in large areas of Icelandic fjords. She devoted a new song, and its revenues, to the battle against salmon farming. Mowi and SalMar have referred to the problems as “terribly sad” and blamed them on “biological challenges” for which they were “really sorry.”
Despite all the controversy, sales of Norwegian seafood boomed last year, especially salmon, which set new records aided by higher prices and a weak Norwegian krone. Nearly 150 countries now buy seafood from Norway, with Poland (which has a large fish processing industry), Denmark and the US topping the list. Export revenues amounted to more than NOK 170 billion, and Norwegian salmon has helped fuel the sushi industry’s worldwide growth as well.
Cod and farmed salmon account for most of the growth, while king crab and herring are also lucrative. The importance of fish farming, though, emerges in the statistics, with traditional fishing of “wild” fish and shellfish accounting for NOK 17.6 billion of the exports last year.
That’s why it’s important for Fisheries Minister Myrseth, who hails from Northern Norway where the fishing industry is especially important, to crack down on problems within fish farming. “This is a situation we can’t have in an industry that’s so important for the country, and not least coastal communities,” she told DN. Seafood exports “mean a lot for the country, for welfare and the development we want to have.”
Asked what’s more important to her, Norway’s reputation or salmon welfare, she answered “both.” She added that the recent rule-breaking that’s been uncovered is “unacceptable” and that “it’s the businesses themselves that must clean up. I can’t do that as fisheries minister. It’s important to me that the industry shows it’s taking this seriously.”