US Foods’ lawsuit names Pilgrim’s Pride, Tyson, Fieldel Farms, Purdue, Sanderson Farms, Koch Foods, Claxton Poultry, Harrison Poultry, Mar-Jack and Wayne Farms.
Kansas City, Mo. – US Foods and Cisco Corp., the two largest food service distributors in the United States, filed antitrust lawsuits against Tyson Foods, Pilgrim’s Pride, Sanderson Farms, Foster Farms, and other companies. The lawsuit is the latest complaint to fix prices for broiler chickens made against leading poultry processors. Springdale, Ark.-based Tyson Foods denies any wrongdoing.
“Such follow-up complaints are common in antitrust lawsuits,” Tyson said. “Such complaints do not change our position that the claims are unfounded. We will continue to vigorously defend our company.”
Food service distributors accused poultry companies of manipulating the supply of broiler chickens. In its lawsuit, US Foods alleged that the companies illegally agreed to reduce the supply of chicken in the form of reducing “breeder herds” through “…unprecedented cuts at the top of the supply chain”, which eventually produce chickens for meat consumption. Processors not only eliminated typical “boom and bust” cycles in the chicken industry by cutting production, but they also “… during periods of rapidly falling input costs, by coordinating supply restrictions and manipulating one or more Raised chicken prices. Broiler Price Index.
Sysco and US Foods also accused processors of artificially manipulating and inflating Georgia Dock using competing information provided by Agri Stats, a unit of Eli Lilly & Co., which collects proprietary information about processors. does. Georgia Dock was a leading weekly wholesale chicken price index compiled from a survey of poultry processors operating in the state.
US Foods’ lawsuit names Pilgrim’s Pride, Tyson, Fieldel Farms, Purdue, Sanderson Farms, Coach Foods, Claxton Poultry, Harrison Poultry, Mar-Jack and Wayne Farms as participants in the self-reporting and 10 Out of these, senior executives of 8 companies have been accused. Was a member of the Georgia Dock Advisory Board “…which played a role in the compilation and manipulation of the Georgia Dock benchmark price.”
The Georgia Department of Agriculture indefinitely suspended the Georgia Dock in 2016 and launched a new index in 2017.
US Foods argued in the company’s lawsuit that the conspiracy was facilitated by several characteristics of the broiler meat market that make it vulnerable to collusion, including a highly concentrated market dominated by vertically-integrated poultry producers; Multiple opportunities for producers to conspire through “regularly scheduled trade union meetings”; and access to competitive data through Agri Statistics, among other factors.
“Indeed, there are hallmarks of the chicken industry susceptible to collusion, including high consolidation, predictable demand in the commodity market, and regular public exposure to prices,” the court documents said.
Broiler chickens include all chicken meat sold in the United States. Court documents state that defendants in the lawsuit earn more than $30 billion in annual wholesale revenue and control nearly 90% of the wholesale chicken market.
US Foods is based in Rosemont, Ill., and Houston, Texas-based Cisco, and failed to merge when the US District Court in the District of Columbia granted the Federal Trade Commission’s request for a temporary injunction blocking the merger. gave permission.
Sysco announced plans to acquire US Foods in 2013 for approximately $8.2 billion. At the time the merger was announced, Sysco reported $44 billion in sales to restaurant, healthcare, educational, housing and other customers, while US Foods reported $22 billion in annual sales.