U.S. poultry producers subject to multiple lawsuits for alleged anti-competitive behaviour

First published by Author on January 03, 2017 in the following categories: Latest and tagged with price fixing

Tyson Foods are subject to anti-competitive lawsuits for alleged poultry price-fixing and collusion in America.

Being the world’s second largest processor of poultry, competition regulation is especially necessary to ensure they’re not making a monopoly and adversely affecting the markets.

Pending lawsuits

According to Wall Street Journal, seven lawsuits have already been filed in the Northern District Court of Illinois, which alleged the meat producers and 13 others “conspired to unlawfully fix, raise, maintain and stabilise the price of broiler chickens by coordinating and limiting their production capacity” in order to reportedly increase their profits.

The lawsuit, filed on 2 September 2016, claimed that the meat producers “fraudulently concealed such anti-competitive conduct in furtherance of the conspiracy” since 2008. Tyson and other poultry producers plan to defend itself “vigorously” against any alleged wrongdoing.

Acknowledgement from future CEO

The future CEO of Tyson Foods, Tom Hayes, addressed the questions that were posed to him at the Bernstein Consumer Summit earlier last month. This also came at a time that the Department of Agriculture announced that the Georgia Dock prices for poultry wouldn’t be reported “due to an insufficient supply of data”.

Georgia Dock pricing index

The Georgia Dock pricing is a chicken pricing index that sounds pretty vague to outsiders, but it’s a term widely used by supermarkets who buy chicken from producers in the U.S. The controversy comes when there is a discrepancy between the Georgia Dock index and other indexes, as consumers may have been paying too much if the poultry is calculated on the Georgia index.

Although both the U.S. Department of Agriculture and the Florida Attorney General’s office have asked the Georgia Department of Agriculture further information about their pricing index, there is insufficient data to warrant an investigation, as mentioned above.

Other poultry producers in the mix

Mr Hayes expected a question in relation to the pending lawsuit against the meat producers for its alleged role in price-fixing and collusion that involves other food companies like: Sanderson Farms, Pilgram’s Pride, Koch Foods and Perdue Farms.

Mr Hayes named the situation “a tempest in a teapot for Tyson”. According to the future chief executive, less than 4-per-cent of the producer’s business is based on Georgia Dock pricing.

Pilgrim’s Pride offered a similar estimate for how much of their chicken sales are based on the Georgia pricing index. Mr Hayes takes the suggestion of overpricing “an attack on our integrity as a company and we take it personally”.

Tyson Foods issued a statement in response to the pending lawsuit, profusely denying any wrongdoing:

“…while we don’t normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court.”