Four chicken industry executives were indicted on Wednesday for allegedly conspiring to fix the prices of chickens sold to restaurants and grocery stores, the Justice Department’s first charges in an ongoing criminal antitrust investigation.
The one count indictment, rendered by a federal grand jury in Colorado, alleges current and former senior executives of Pilgrim’s Pride Corp. and Claxton Poultry Farms fixed prices and rigged offers from 2012 to 2017.
Pilgrim’s, based in Colorado, is the second largest producer in the country. Company chief executive Jayson Penn has been indicted, as has former Pilgrim vice chairman Roger Austin. Georgia-based Claxton chairman Mikell Fries and a vice chairman Scott Brady have both been indicted.
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The companies did not immediately respond to requests for comment and individual executives could not be immediately reached.
Accusations of collusion have eclipsed the US $ 65 billion chicken industry since late 2016, when catering companies and other poultry buyers sued major poultry producers, accusing them of illegally coordinating operations to inflate prices. Chicken companies, including Tyson Foods Inc., Pilgrim’s Pride, Sanderson Farms Inc. and Perdue Farms Inc., have denied the claims.
Since then, similar pricing lawsuits have been brought against chicken companies by some of the biggest food vendors, including supermarket giants Walmart Inc., Kroger Co. and Albertsons Cos., As well as suppliers of food. Sysco Corp. restaurants and US Foods Holding Corp. ., who supply meat to hundreds of thousands of restaurant customers.
The chicken farmers have denied the allegations in the private litigation and are fighting the lawsuits. They said supply and demand factors have driven up poultry prices over the years, including rising domestic consumption and exports.
The Justice Department’s investigation into chicken prices came to light last year when government lawyers sought to intervene in this ongoing litigation, seeking evidence from plaintiffs’ attorneys and requesting a break in collection additional evidence to protect the grand jury investigation. The Justice Department then issued subpoenas to Tyson, Pilgrim’s, Sanderson and other poultry producers. The companies said they would cooperate with the government’s demands.
Wholesale chicken prices have climbed 11% since mid-2012, when the US Department of Agriculture began calculating national prices for whole chickens, until the end of 2018. The companies have increased production and expanded their factories, anticipating greater exports after the conclusion of new trade agreements.
The chicken industry is dominated by a handful of companies after decades of consolidation. The five largest companies control 61% of chicken production in the United States, according to Watt Global Media, an industry publication. Tyson, the biggest, accounts for 21%.
Colorado-based Pilgrim’s accounts for about 17% of the U.S. market, according to Watt, and the company estimates it produces about 13 billion pounds of chicken annually. Georgia-based Claxton estimates that it produces around 300 million pounds of chicken per year.