UPDATE: April 7, 2021: McDonald’s will seek damages from Tyson Foods and Pilgrim’s Pride for chicken pricing allegations, according to Insider. The website reported that the fast food chain wrote in an internal memo that it was monitoring developments, including recent deals made in the ongoing scandal.

Dive brief:

  • Chick-fil-A, one of the largest chicken fast food chains in the United States, has sued more than a dozen poultry farmers, accusing them of breaking antitrust law by colluding to inflate prices artificially after the chain announced in 2014 that it planned to serve broiler chicken without antibiotics for the next five years. The company filed a lawsuit in U.S. District Court on Friday for the Northern District of Illinois.
  • Chick-fil-A said in the lawsuit that poultry producers “had significant market power in the broiler market and their conduct had anti-competitive effects. The channel said the actions resulted in “a verifiable amount of damages to be established at trial.”
  • The restaurant chain is the latest to take legal action against poultry producers for pricing in recent years. Major CPG companies, grocery chains and distributors – including Walmart and Sysco – have also filed civil lawsuits against these processors with similar antitrust charges.

Dive overview:

After Chick-fil-A announced its intention to offer only chicken without antibiotics about six years ago, the company claims in the lawsuit that a number of poultry farmers communicated by phone and text to share confidential information about offers and prices. The Chicken Chain said it bought billions of dollars in broiler chickens from the defendants and their co-conspirators at artificially inflated prices.

The charges come amid the Justice Department’s investigation into other antitrust charges against poultry producers. The Justice Department’s investigation into the poultry industry was initially disclosed last year when it intervened in a price fixing lawsuit filed in 2016. The class action lawsuit accuses chicken farmers – including Pilgrim’s Pride, Perdue Farms, Tyson Foods and Sanderson Farms – for conspiring to inflate the prices of broiler chicken. Chick-fil-A’s The lawsuit includes similar charges, and the company said in its lawsuit that it was identified in the Justice Department’s indictment as “QSR-5”.

The intervention allowed federal attorneys to gather evidence and protect the grand jury investigation, which has since resulted in indictments for leaders and plea deals. Tyson Foods announced in June that it is fully cooperating with the DOJ’s investigation under the Antitrust Division’s corporate leniency program, which can allow a business that does come forward to avoid criminal convictions and fines. In October, Pilgrim’s Pride agreed to pay $ 110.5 million in a plea deal in connection with the investigation into the pricing of the sale of broiler chicken products. Pilgrim’s two previous CEOs were also among 10 poultry farmer officials who have been charged with price fixing charges this year.

Even if Chick-fil-A is one of the largest restaurant chains to take legal action against poultry producers for price fixing, it is not the only one. Cracker Barrel Old Country Store, White Castle and Golden Corral all sued the same large poultry processors in October, hoping to seek damages for paying inflated poultry prices. Last year, Darden restaurants also sued 18 chickens producers for the same reason. There could be further lawsuits from other retailers, restaurants and suppliers who believe they have also been subjected to higher prices as the Justice Department continues its investigation.

Charges of antitrust activity in the food industry have escalated in recent years and some executives have faced criminal charges. In June, Chris Lischewski, former CEO of Bumble Bee Foods has been condemned to more than three years in prison for conspiracy to fix the prices of canned tuna. And JBS recently reached a settlement agreement in a lawsuit that accuses the company of setting pork prices for direct buyers by conspiring with other meat processors. Analysts said as federal lawsuits and charges continue to pile up, they could act as a deterrent for any future antitrust action in the industry.


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