Conspiracy to Constrain Supply of Beef Antitrust Class Action

When a particular product is scarce, its price rises. The complaint for this antitrust class action alleges that a number of beef companies have conspired to constrain beef supplies in the US in order to artificially inflate prices for direct purchasers. The case has been filed on behalf of parties who purchase meat directly from the defendants, which include Cargill, Inc., Cargill Meat Solutions Corporations, JBS S.A., JBS USA Food Company Holdings, JBS Packerland, Inc., National Beef Packing Company, Swift Beef Company, Tyson Foods, Inc., and Tyson Fresh Meats, Inc.

The class for this action is all persons and entities who bought beef directly from any of the listed beef company defendants or their subsidiaries or affiliates, for use or delivery in the US from at least January 1, 2015 to the present.

The group of defendants in this case are the largest meat processing and packaging companies in the world, who together sold around 80% of the fresh and frozen “boxed” and “case ready” beef sold to the US market for beef.

This is a highly concentrated market, which makes it easier for the companies to manipulate the market. The complaint alleges that the way they executed their scheme was to reduce the availability of beef entering the US domestic supply chain, which has had the effect of artificially inflating prices.

How do we know about this conspiracy? The complaint claims that a confidential witness (Witness 1) exists who previously worked at one of the beef companies. This person “has confirmed that each of the [beef companies] has expressly agreed to reduce their respective purchase and slaughter volumes, which would have the effect of artificially raising the price of beef sold to direct purchasers.”

Witness 1’s information is supported by transactional data and slaughter records published by the US Department of Agriculture (USDA). The beef companies have also called for reductions of slaughter and capacity throughout the industry.

The beef companies are in a good position to operate this conspiracy, the complaint says. They buy fed cattle from farmers and ranchers and turn it into edible beef.

The complaint says this gives them a “gatekeeping role that has enabled them to collusively control both upstream and downstream pricing” during the class period. They can both buy fewer cattle and run their processing facilities at a lower capacity. The resulting combination of surpluses in the cattle market and shortages in the wholesale beef market benefits their profit margin.

According to the complaint, the farm-to-wholesale price spread was around $34 between 2010 and 2014, before the conspiracy; from the beginning of the conspiracy in 2015 through 2018, the spread rose to $59; and by January 2019, it was $69.

Article Type: Lawsuit
Topic: Antitrust

Most Recent Case Event

Conspiracy to Constrain Supply of Beef Antitrust Complaint

July 17, 2020

When a particular product is scarce, its price rises. The complaint for this antitrust class action alleges that a number of beef companies have conspired to constrain beef supplies in the US in order to artificially inflate prices for direct purchasers. The case has been filed on behalf of parties who purchase meat directly from the defendants, which include Cargill, Inc., Cargill Meat Solutions Corporations, JBS S.A., JBS USA Food Company Holdings, JBS Packerland, Inc., National Beef Packing Company, Swift Beef Company, Tyson Foods, Inc., and Tyson Fresh Meats, Inc.

Conspiracy to Constrain Supply of Beef Antitrust Complaint

Case Event History

Conspiracy to Constrain Supply of Beef Antitrust Complaint

July 17, 2020

When a particular product is scarce, its price rises. The complaint for this antitrust class action alleges that a number of beef companies have conspired to constrain beef supplies in the US in order to artificially inflate prices for direct purchasers. The case has been filed on behalf of parties who purchase meat directly from the defendants, which include Cargill, Inc., Cargill Meat Solutions Corporations, JBS S.A., JBS USA Food Company Holdings, JBS Packerland, Inc., National Beef Packing Company, Swift Beef Company, Tyson Foods, Inc., and Tyson Fresh Meats, Inc.

Conspiracy to Constrain Supply of Beef Antitrust Complaint
Tags: Antitrust, Constraining of Supply