US Poultry Suppliers Accused of Fixing Chicken Prices

Three major food businesses have filed lawsuits accusing poultry suppliers Tyson, Pilgrim’s Pride and others of fixing chicken prices in the U.S.

Plaintiffs Bob Evans, The Fresh Market and Wawa filed separate lawsuits against the poultry suppliers, but each puts forth similar allegations.

The businesses are seeking damages for chicken purchased between early 2008 and late 2017, according to Just Food.

The buyers’ lawsuits name 19 total defendant companies, Meat + Poultry reported. The buyers allege the poultry producers colluded to curtail supplies of broiler chickens, as well as to manipulate price and contract negotiations.

The lawsuit say the defendants “conspired and combined to unlawfully and artificially inflate the price of chicken,” implementing “supracompetitive chicken prices that Plaintiff and other purchasers throughout the United States were required to pay.”

The buyers say the defendants were able to restrain trade though their conspiracy to inflate the price of broiler chickens and increase their profits by reducing the supply of broiler chickens, manipulating prices and contract negotiations and falsely touting price indices as being reliable in order to justify their inflated prices.

The lawsuits say one of alleged conspirators, Fieldale Farms, which is not named as a defendant in these cases, “has already agreed to pay $2.25 million to settle claims by a putative class of direct purchasers alleging that Fieldale Farms participated in this conspiracy.”

In addition, the plaintiffs say, the U.S. Department of Justice (DOJ) and the Antitrust Section of the Florida attorney general’s office are “investigating the industry for anticompetitive practices.”

“To date, the DOJ’s Investigation has resulted in an indictment being filed in the District of Colorado against individuals from Defendants, Pilgrim’s Pride and Claxton Poultry,” the lawsuits say. “Specifically, the Indictment charges Jayson Penn, President and CEO of Pilgrim’s Pride, Mikell Fries, President of Claxton, Scott Brady, Vice President of Claxton, and Roger Austin, Vice President of Pilgrim’s Pride,” with violating of the Sherman Act.

Penn is on leave while awaiting trial following the grand jury indictment, Just Food reported.

The plaintiffs say broiler chickens make up about 98% of all chicken meat sold in the U.S., and the defendants are among the country’s leading suppliers, with more than $30 billion in annual revenue and control of about 90% of the wholesale chicken market.

The plaintiffs allege the defendants curtailed the chicken supply by making “unprecedented cuts at the top of the supply chain” by reducing breeder flocks that produce chickens to be slaughtered for meat.

“Historically, when faced with low market prices, Defendants relied primarily on mechanisms that temporarily reduced production – at the middle or end of the supply chain, such as reducing eggs placements, killing newly-hatched chicks, or idling processing plants – but which still allowed them to ramp up production within weeks if chicken prices increased,” the lawsuits say.

The plaintiffs allege that as a result of such cuts made in 2008 and 2011-2012, there has been a nearly 50% increase in the wholesale chicken prices since 2008, even though input costs have fallen by an estimated 20% to 23% in the same period.

“The rise in chicken prices relative to input costs has led to record profits for Defendants,” the plaintiffs claim.

They believe the alleged conspiracy began around March 4, 2008, after senior executives from the defendant companies attended a meeting of the National Chicken Council’s Board of Directors.

They say shortly after that meeting took place, Pilgrim’s Pride put out “the call to cut overall industry supply, and proceeded with production cuts.” This move was followed by the company’s March 12, 2008, announcement that the company would close seven facilities “in order to reduce industry oversupply.”

A series of production cuts were announced by other defendants in April 2008.

Representatives from the companies allegedly continued to attend trade meetings over the next few years, and several similar changes were implemented along the way.

The coronavirus pandemic forced the closure of a number of meat-processing plants, according to the Northwest Arkansas Democrat Gazette. As workers became ill with COVID-19, they began claiming they had faced unsafe working conditions at the plants, including a lack of protective equipment and social distancing.

Tyson was seeking to have one of those cases heard in federal court, the Democrat Gazette reported.

Tyson and other poultry producers faced a similar class action lawsuit in 2018, when several grocers accused the companies of taking part in a price-fixing scheme to artificially inflate poultry prices.

The plaintiffs in the three most recent poultry price-fixing lawsuits are asking the Court to award damages in an amount to be determined at trial; post-judgment interest; attorneys’ fees and court costs; and any other deemed appropriate.

All three also demand a jury trial.

Do you think the poultry suppliers fixed their prices on chicken? Tell us what you think of these lawsuits in the comments below.

The plaintiffs in all three cases are represented by David B. Esau, Sarah Cortvriend, Kristin A. Gore, Amanda R. Jesteadt and Stephen A. Cohen of Carlton Fields PA; and Joseph M. Vanek and Michael G. Dickler of Sperling & Slater PC.

The Fixed Chicken Prices Lawsuits are Wawa Inc. v. Tyson Foods Inc., et al., Case No. 1:20-cv-05259; Bob Evans Farms Inc. v. Tyson Foods, et al., Case No. 1:20-cv-05253; and The Fresh Market Inc. v Tyson Foods, et al., Case No. 1:20-cv-05257; all in the U.S. District Court for the Northern District of Illinois, Eastern Division.

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