Lawsuits Allege Price-Fixing by Beef Companies

Just a few months after news broke that U.S. Justice Department was investigating chicken companies for alleged antitrust violations, similar allegations are piling up against beef companies.
Consumers, ranchers, and a meat distributor have now filed lawsuits alleging that the country’s biggest beef companies have broken antitrust law by conspiring to raise the price of beef and lower the amount paid to producers. The most recent was filed on October 16 by the California food distributor, Pacific Agri-Products Inc. The distributor alleges that since 2015, Tyson Foods, JBS, Cargill, and National Beef have coordinated to cut supplies and artificially raise the price of beef and consequently hike their profits. Meanwhile, a suit brought in April by feedlot owners and ranchers alleges that during the same time period, the companies suppressed the price they paid producers for cattle. Ranchers say that as a result of the alleged collusion, the price of “fed cattle” — animals that are ready for slaughter — dropped by an average of 8%. The four companies named in the lawsuit control over 80% of the country’s beef supply to the wholesale market, according to the distributor’s complaint. This dominant market share “allowed for the conspiracy to occur, continue, and prosper,” the complaint says.Pacific Agri-Products’ class-action case is the first brought against the beef companies on behalf of distributors who buy directly from the largest beef packers and resell the meat to retailers and others.The distributor alleges that starting as early as 2015, the four beef packers conspired to “fix, maintain, and raise the price of beef” through “periodic and parallel slaughter reductions.” They allegedly coordinated these slaughter reductions through secret meetings at industry gatherings, such as the National Cattlemen’s Beef Association annual convention; public earnings calls where executives discussed curtailing supply; and other forms of “surreptitious communications.” As evidence, the distributor points to several instances between 2013 and 2015 when the four packers reduced capacity or closed plants. In 2013, Cargill idled a beef processing plant in Texas with the capacity to slaughter nearly 5,000 cattle per day. In 2014, National Beef shuttered a California plant that could slaughter 1,000 cattle per day. The companies cited dwindling cattle supply as the reason for halting their processing lines. Yet the distributor alleges that the closures were meant to hike beef prices.Between 2015 and 2018, the distance between the cost of wholesale beef and the price paid to ranchers — known as the “spread” — increased over 60%, according to data from the USDA cited in the complaint...MORE