Walmart Vs. Big Chicken

02:25PM May 29, 2019
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Walmart, America’s largest retail grocer, has filed suit against various U.S. poultry companies alleging a conspiracy to inflate chicken prices.
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Walmart, America’s largest retail grocer, has filed suit against various U.S. poultry companies alleging a conspiracy to inflate chicken prices.

The antitrust suit, filed in the U.S. District Court for the Western District of Arkansas, alleges that more than a dozen major chicken companies “reached illegal agreements and restrained trade.”

The suit alleges that as early as 2008 through at least 2016, “Defendants’ restraint of trade was implemented primarily through two mechanisms. The first focused on coordinating their output and reducing the supply of broiler chickens into the market. The second focused on (among other things) manipulating price indices with respect to wholesale chicken prices.”

Companies named as defendants include: Pilgrim’s Pride, Koch Foods, JCG Foods, Koch Meat Co., various Sanderson Farms units, House of Raeford Farms, MAR- JAC Poultry, Perdue Farms and Perdue Foods, Wayne Farms, various O.K. Foods units, Peco Foods, Harrison Poultry, Foster Farms, Claxton Poultry Farms, various  Mountaire Farms units Amick Farms, various Case Foods units and Agri Stats Inc.

Noticeable by its absence in the suit is Tyson Foods, Inc, George’s Inc., and Simmons Foods, Inc. All three companies were named as defendants in similar price fixing cases in Illinois. An annual SEC filing from November 2018 indicates 17.3% of Tyson’s consolidated sales in 2018 were to Walmart.

Walmart’s lawsuit alleges, “the broiler producers’ coordinated output restriction scheme was successfully facilitated by, monitored and policed using reports purchased, at significant cost, from Defendant Agri Stats, Inc. Agri Stats collects detailed, proprietary data from all Defendants and others, including housing used, breed of chicks, average size, production, and breeder flock levels.”

Several lawsuits have been filed since 2016 alleging price-fixing by poultry companies. One defendant to an earlier lawsuit, Fieldale Farms, “agreed to pay $2.25 million to settle claims by a putative class of direct purchasers alleging that it participated in this conspiracy.” As a result, claims against Fieldale Farms were released.

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