Poultry processors are facing litigation to increase product prices.
On October 19, the Cracker Barrel Old Country Store filed a lawsuit against Tyson Foods Inc., Pilgrim’s Pride Corp. in the US District Court in Northern Illinois. and other poultry companies. At the same time, White Castle and Golden Corral filed price fixing agreements against the poultry suppliers on October 16. All chains are demanding repayment of overcharges paid on excessive poultry prices, claiming the companies have “bid rigging for food service companies and other companies that have bought broiler chickens in bulk. “In addition, the suppliers” conspired to limit competition in the broiler chicken market by reducing and misrepresenting the supply of broilers and manipulating the price indices associated with wholesale broiler prices. “
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Cracker Barrel claims the program started back in 2012 and lasted at least until 2019. The filing states in part: “Cracker Barrel, like many restaurants, has signed a contract directly with the defendants to purchase their chicken products. Defendants used their coordinated manipulation of wholesale price indices and their coordinated actual and false supply reductions of broilers to enter into contracts to supply the Cracker Barrel system with broilers at artificially inflated prices. As a result of the defendants’ price fixing and bid-fixing behavior, the defendants were able to request significant price increases from Cracker Barrel and other restaurants. The defendants adhered to their collusive agreements and arrangements throughout the conspiracy period. Defendants profited from their illegal behavior by producing and selling broilers directly and through their wholly owned or controlled subsidiaries and affiliates at excessive, uncompetitive prices. By their collusive, anti-competitive actions, the defendants negated the economic benefits of increased competition. The defendants’ conduct resulted in their customers, including Cracker Barrel, overpaying the defendants in the millions. “
In June, the US Department of Justice (DOJ) indicted former Pilgrim’s Pride chief executive Jayson Penn and three others in a criminal investigation into broiler birds. In early October, six other poultry managers were charged with alleged price fixing, including William Lovette, former CEO of Pilgrim’s Pride. Penn took the reins from Lovette last year and pleaded not guilty. The company announced that Penn later left the company and was replaced as CEO by Chief Financial Officer Fabio Sandri.
Sales director Timothy Mulrenin was also charged. He was hired by Perdue Farms in 2018 and was employed by Tyson Foods at the time of the allegations. Mulrenin, who was hired by Perdue Farms in 2018, was working at Tyson Foods at the time of the allegations.
“Executives who choose to collude against competition will be held accountable for systems that defraud consumers and corrupt our competitive markets,” said Makan Delrahim, director of antitrust at DOJ.
Tyson reported in June that it was working with the Justice Department investigation on a company leniency program that could potentially enable the company to avoid criminal charges. “The latest indictment does not affect Tyson’s status in his leniency application,” said spokesman Gary Mickelson of the follow-up in October.
Three restaurant chains are suing poultry processors
The US lists six other executives in the chicken industry for alleged price fixing