Meat, poultry, and seafood companies across the U.S. are facing legal trouble.
The Justice Department sent civil investigative demands to four meatpackers over potential antitrust violations, according to a person familiar with the matter, reported Bloomberg (June 4).
The department’s antitrust division sent civil investigative demands to the companies and is talking with state attorneys general about the probe after a group of states called for an investigation.
Tyson Foods Inc., JBS SA, Cargill Inc., and National Beef Inc. control more than 80% of the U.S. beef processing market. The dominance has sparked long-standing concerns about their pricing power over livestock suppliers.
Kansas City, MO-based National Beef confirmed it received a civil investigative demand from the Justice Department, while Tyson, JBS, and Cargill did not comment.
“The request was very narrow in scope, which leads us to believe that the DOJ does not necessarily believe there is an antitrust issue,” National Beef said.
The subpoenas to the meatpackers follow criminal charges last week over price fixing against four current and former executives of chicken processing companies, including Jayson Penn, CEO of Pilgrim’s Pride Corp.
The other executives allegedly involved in the scheme include former Pilgrim’s Pride VP Roger Austin, Claxton Poultry Farms president Mikell Fries, and Scott Brady, a former Pilgrim’s Pride executive who joined Claxton in 2012, reported CNBC (June 3).
A grand jury in the U.S. District Court in Denver, CO, indicted all four with one count of conspiring to fix prices for broiler chickens from at least 2012 through 2017. The indictment said the Pilgrim’s Pride and Claxton executives communicated to each other nonpublic information about negotiations with fast food chains and grocery stores and put forth similar bids.
The criminal investigation is still ongoing, and the four men are the first to be charged, according to the Department of Justice.
The Wall Street Journal reported June 4 that Penn pleaded not guilty to federal charges that he conspired to fix chicken prices. “He plans to fight these charges and expects to be fully vindicated,” Michael Tubach, a lawyer for Penn, said at a hearing.
A judge imposed conditions that he can’t contact employees of eight companies that are customers of Pilgrim’s and are alleged victims of price fixing, and can’t contact price negotiators at other chicken suppliers who allegedly participated in the price fixing.
Meanwhile, a Washington state lawsuit alleged price fixing by StarKist and rival tuna conglomerates, reported The Seattle Times (June 2).
The lawsuit alleges a three-company price fixing scheme between 2004 and 2015 cost Washington residents at least $6 million by artificially driving up the cost of canned tuna. For example, the lawsuit said a resident ordinarily paying $1 for a can of chunk light tuna might have paid $1.08 under the scheme.
“We cannot have a free market where corporate titans are able to tip the scales to their own bank accounts,’’ said Washington State Attorney General Bob Ferguson, adding he seeks full restitution allowable under state law in addition to court costs. “Washingtonians lost millions as a result of this corporate greed. I intend to get that back for them.’’
Washington is the first state seeking compensation from the tuna giants after a U.S. District Court judge imposed a $100 million fine against StarKist in December for its role in the scheme. Bumble Bee already paid a $25 million fine in 2017 because it was judged to be in a rougher financial state and faced additional lawsuits from Walmart and other supermarkets and customers.