Broiler Chicken Integrators Grow-Out Services Antitrust Class Action

This antitrust and unfair competition class action brings suit against eleven “vertically-integrated” broiler chicken grower companies under the Tyson, Pilgrim’s Pride, Perdue, Koch, and Sanderson Farms names. The complaint describes these companies as a cartel that has, since at least 2008, conspiring so as “not to compete for Broiler Grow-Out Services, with the purpose and effect of fixing, maintaining, and/or stabilizing Grower compensation below competitive levels.

The class for this action is all individuals and entities in the US and its territories who were paid for broiler grow-out services by one of the defendants or co-conspirators in this case, or by a division, subsidiary, predecessor, or affiliate of one of the defendants or co-conspirators, at any time between January 27, 2013 and the date the anticompetitive effects of the defendants’ behavior end.

How did the group operate? The complaint alleges that the members “illegally agreed to share detailed data on Grower compensation…. By disclosing their highly sensitive and confidential compensation rates to each other, they suppressed competition for Broiler Grow-Out Services and drove down compensation” to growers in general.” Furthermore, the “members also agreed not to solicit Growers associated with other Integrators. This, the complaint says, kept down any competitive pressures that might interfere with the success of their information-sharing arrangement.

The complaint quotes a book—The Meat Racket: The Secret Takeover of America’s Food Business—as saying that the conspiracy “were designed to keep Growers … in a state of indebted servitude, living like modern-day sharecroppers on the ragged edge of bankruptcy.”

The plaintiff in this case, Henry Randall Colvin, began his career as a grower by providing broiler grow-out services to Tyson. He initially borrowed $175,000 to build broiler houses that would meet Tyson’s specifications. Later, Tyson required that he make other investments in the broiler houses, which cost him another $500,000. The complaint alleges, “Tyson threatened not to deliver Broilers for Colvin to care for unless Colvin” made the requested improvements.

The companies control all aspects of broiler growing through contract farming arrangements (CFAs) with growers. According to the complaint, broilers grown under CFAs include “over 97% of domestic Broilers produced annually in the United States.” Also, it says, the defendant companies in this case hold the contracts for more than 60% of broiler grow-out services. Because of this tight control, the complaint says, there has been no spot or cash market for broilers.

The complaint alleges that the broiler industry is “the most vertically integrated segment of agriculture today” and says, “There are only approximately 25 Integrators in the nation.” Their complexes include hatcheries, feed mills, and slaughter and processing plants. However, the CFA arrangements “transfers the risk of broiler production” from the integrator companies to the growers.

Article Type: Lawsuit
Topic: Antitrust
Tags: Antitrust, Collusion and Price Fixing, No-Poach Agreements, Wage Suppression