Chicken Price-Fixing Scheme: DOJ Investigates Tyson, Perdue, and Others

The U.S. Justice Department is pursuing a criminal investigation into claims that some of the country’s biggest poultry companies — including Tyson, Perdue, and Pilgrim’s Pride — orchestrated a massive price-fixing scheme involving broiler chickens.

Last week, the DOJ intervened in a class-action lawsuit filed by purveyor Maplevale Farms alleging that some of the country’s top poultry processors were manipulating chicken prices. The Justice Department asked a federal judge in Illinois to stop the discovery process related to the Maplevale suit for six months so that the federal agency could continue its investigation into these big companies. “The Justice Department wants to make sure they get first crack at all the possible evidence,” Peter C. Carstensen, an antitrust expert at University of Wisconsin-Madison’s Law School, tells the Times. “Within six months, either they’ll present the case to the grand jury or they’ll decide there’s not enough there to qualify for proof of liability beyond a reasonable doubt.”

Maplevale’s suit claims that Tyson Foods, Sanderson Farms, Perdue Farms, and Pilgrim’s Pride worked together to drive up the price of broiler chickens by destroying flocks of breeder hens, thereby reducing production rates. (This scheme is oddly reminiscent of the plot of a recent Billions episode called “Chickentown.”) The suit alleges that these companies used a subscription service called Agri Stats to share information with each other about the age of their chickens and operating costs. Carstensen points out that trading this kind of info would be “extraordinarily beyond what any rational business would do.” According to the Times, the price of broiler chickens jumped by 50 percent between 2008 to 2016, despite the fact that cost of feeding the chickens went down during this period. Three of these companies — Sanderson, Tyson, and Pilgrim’s Pride — control nearly half the American chicken market.

Of course, if the DOJ does find credible evidence that there was a price fixing scheme, the investigation could lead to criminal charges or injunctions for these four big companies. Representatives for Tyson, Pilgrim’s Pride, and Sanderson Farms all dismiss the claims outlined in the lawsuit, while Perdue has yet to comment. Stay tuned for updates on the chicken price-fixing scandal as they become available.

U.S. Probes Claims of Poultry Price-Fixing [Bloomberg]
Why Chicken Producers Are Under Investigation for Price Fixing [NYT]
Justice Department Investigates Chicken Industry [WSJ]



https://www.eater.com/2019/6/26/18759596/chicken-price-fixing-investigation-perdue-tyson-sanderson-farms