Olean Wholesale Grocery Cooperative led a class action lawsuit on Friday in the District of Minnesota against a group of meat processing and packing companies (including Cargill, Tyson, National Beef, and JBS) alleging that the group conspired to control beef prices in violation of the Sherman Act.
The plaintiffs claimed in the associated complaint that since 2015, the defendants, who control 80% of the beef supply in the United States, conspired to artificially reduce production of beef in order to raise prices for their direct purchasers. The class asserted that because the companies “sit atop the supply and distribution chain that ultimately delivers beef to the market” they retain the “vital role” of purchasing cattle from the “nation’s farmer and ranchers,” processing cattle into beef, and selling beef to retailers, like the plaintiff class. Given the defendants’ presence in every level of the “live cattle to sellable beef” process, the plaintiffs proffered that the “[d]efendants’ gatekeeping role has enabled them to collusively control both upstream and downstream pricing throughout the class period.”
Federal law makes it illegal for businesses to conspire together in ways that result in barriers to interstate trade. To violate is to commit a felony resulting in up to $100,000,000 in civil penalties and a maximum of 120 months confinement. The class averred that the defendants’ violations were simple to understand: the meat companies held daily meetings to discuss and implement strategies for artificial market manipulation. These conspiratorial summits resulted in the killing off of cattle, the breeding of fewer cattle than the market necessitated, and the closing of production & distribution plants. Even more, the plaintiffs argued, these actions stand as all the more egregious given the unique characteristics of the cattle market, such as supply difficulties (cattle require months of preparation in order to be ready for slaughter) and barriers to entry for the market.
All in all, the class claimed that the end result of the antitrust violations were beef prices for retailers at more than a 50% increase of where an unaltered market otherwise provided. This is the second class action filed against the defendants in recent months. Central Grocers initiated a similar class action in June on almost identical antitrust violations. The class of plaintiffs led by Olean Wholesale is represented by Burns Charest LLP.