Tyson Foods, Inc. and other packers pay millions to settle lawsuit
After a four-year legal battle in which consumers, restaurants and supermarkets accused major meat corporations of conspiring to raise pork and poultry prices, Tyson Foods, Inc. agreed to pay $221.5 million at the end of January to settle multiple private lawsuits between the company and several poultry buyers who accused Tyson Foods, Inc. of intentionally raising chicken prices.
According to the Jan. 20 regulatory filing, the company said it reached an agreement to settle all class claims related to broiler chicken litigation and comes after Pilgrim’s Pride Corp.’s, of Greeley, Colo., settlement of $75 million announced earlier in January.
“Tyson Foods believes the settlements were in the best interests of the company and its shareholders in order to avoid the uncertainty, risk, expense and distraction of protracted litigation,” the company said in a filing with the U.S. Securities and Exchange Commission.
Three class-action lawsuits
According to Emeritus Law Professor and Former Federal Antitrust Attorney Peter Carstensen, Tyson Foods, Inc. is settling three class-action lawsuits from wholesale buyers, indirect purchasers and direct consumers, all of whom accused Tyson Foods, Inc. and other poultry corporations, of conspiring together to rig the poultry price index.
Other poultry processors named as defendants in the lawsuit include Amick Farms, Case Farms, Claxton Poultry, Fieldale Farms, Foster Farms, George’s, Harrison Poultry, House of Raeford Farms, Koch Foods, Mar-Jac Poultry, Mountaire Farms, OK Foods, Peco Foods, Perdue Farms, Sanderson Farms, Simmons Foods and Wayne Farms.
Carstensen notes these processors allegedly used the data-sharing service AgriStats to monitor each other and identify any deviants in the conspiracy.
Amick Farms, Fieldale Farms, George’s, Peco Foods and Pilgrim’s Pride have all reached settlement agreements with the plaintiffs.
Foul play suspected
While both Tyson Foods, Inc. and Pilgrim’s Pride Corp. did not admit liability as part of the settlements, some antitrust experts suspect foul play because of the size and timing of the settlements.
“When we see a settlement like this, it tells us the defendants have made the assessment there’s a substantial likelihood they will lose and they will lose big,” says Carstensen. “That is, the jury will not only find they colluded but the collusion resulted in significant damages.”
Deterring future price fixing
Although $221 million is a steep penalty, Carstensen says it likely dwarfs in comparison to what the corporation made in illicit profits.
Therefore, Carstensen and other scholars are pushing for more behavioral remedies or conditions to force corporations to change their business practices, such as reasonable restrictions on information sharing through third parties like AgriStats. These scholars believe criminal charges for executives are a much stronger deterrent for corporate decision makers.
Hannah Bugas is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
