Chicken Producers Face Another Lawsuit Alleging Price Fixing

January 31, 2018 03:53 PM

(Bloomberg) -- Two large U.S. food distributors added to a string of lawsuits that accuse chicken companies of illegally conspiring to raise poultry prices.

Sysco Corp. and US Foods Holding Corp. made the complaints on Tuesday in separate lawsuits filed in the northern district of Illinois. Both claim that numerous companies, including Tyson Foods Inc., Sanderson Farms Inc., Pilgrim’s Pride Corp. and closely held Perdue Farms Inc., made illegal agreements and reduced chicken supply to boost prices. Shares of the poultry producers fell in New York.

The chicken industry has faced similar lawsuits since mid-2016. Tyson shares fell as much as 5.1 percent, the largest intraday loss since May. Sanderson and Pilgrim’s Pride dropped the most since mid-December.

“The addition of US Foods and Sysco, which represent one-quarter of food distribution, add fuel to the prosecution, which could elongate the process,” Jeremy Scott, an analyst at Mizuho Securities, said in a note. “We expect the industry to fight the allegations and come out successful.”

Follow-on complaints are common in antitrust litigation, and Tyson maintains its position that the claims are unfounded, spokesman Gary Mickelson said in an email. “We will continue to vigorously defend our company,” he said.

Sanderson Farms plans to defend itself vigorously, Chief Financial Officer Mike Cockrell said in a telephone interview. Pilgrim’s Pride spokesman Cameron Bruett said in an email that the company believes the case is “completely without merit,” and “we look forward to defending our interests through the appropriate legal process.”

Perdue, Houston-based Sysco and Rosemont, Illinois-based US Foods said separately that they don’t comment on pending litigation.


©2018 Bloomberg L.P.

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