Walmart sues poultry industry for price collusion, omits Tyson Foods, Simmons & George’s

by Kim Souza (ksouza@talkbusiness.net) 1,474 views 

Walmart Inc. has filed suit against the U.S. poultry industry for alleged price collusion and violation of antitrust laws. Essentially the entire poultry processing industry was named as defendants in the suit filed May 24 in U.S. District Court for the Western District of Arkansas.

Tyson Foods, Simmons Foods and George’s Inc. and Northwest Arkansas based businesses that each serve Walmart on some level were omitted from the suit which does name all their competitors such as Pilgrim’s Pride, Sanderson Farms, OK Foods, Koch Foods, Perdue Farms, Peco Foods and Wayne Farms along with seven other U.S. chicken companies.

The 98-page complaint seeks judgments against the defendants for an amount to be determined at trial. The retail giant is also asking defendants to pay the plaintiff’s legal fees and litigation costs as the law provides. The complaint claims the chicken industry shared confidential information and conspired to destroy flocks, close plants, and cut back on production overall to raise chicken prices as much as 50% during a 10-year period from the cyclical lows of 2008.

Talk Business & Politics asked Walmart why they omitted Tyson, Simmons and George’s from the suit as Tyson is named throughout the argument within the report as being complicit with the price-fixing having reached illegal agreements and restraining trade between 2008 and 2015.

“Like dozens of other retailers and wholesalers, we filed suit objecting to anti-competitive behavior of poultry suppliers. By filing a complaint separate from the class action that began in 2016, we believe we can best protect our business and our customers from artificially increased costs. For more than 50 years, we’ve focused on giving our customers great deals with an everyday low-cost mindset that is core to who we are,”

“To your question on other parties, we aren’t discussing details of the litigation other than to refer you to the claims in our complaint,” said Walmart corporate spokesman Randy Hargrove.

Tyson, Simmons and George’s have been named in the other suits alleging the same claims as Walmart. Walmart chose not to include them as defendants in their case. Perhaps the reason is personal relationships between the founding families of these companies and their ongoing work together through leadership roles on the Northwest Arkansas Council. Walmart is Tyson Foods’ largest customer comprising roughly 17% of the companies revenue, but this is true for other companies as well also named in the suit.
https://talkbusiness.net/2018/01/price-collusion-suits-mount-against-tyson-foods-and-other-poultry-companies

Walmart joins Kroger, Publix, U.S. Foods, Sysco, B.J.’s Wholesale Clubs, Darden Restaurants and others in filing separate suits after the 2016 class action case was filed by Maplevale Farms, a food distributor impacted from the price increases it said was related to market control from within the industry. One of the participants in the alleged conspiracy, Fieldale Farms, has already agreed to pay $2.25 million to settle claims by a class of purchasers alleging it participated in this conspiracy.

This settlement was seen by the legal community as an admission of guilt and the additional lawsuits have continued to stack up. Each suit is based on the same sharing of information and controlling prices that meant higher prices for consumers, food service and retailers. The original class action suit remains open.

The federal complaint spells out a conspiracy plaintiffs say was pulled off with the help of Agri Stats that allowed the prices of chicken to rise, abandoning the supply and demand method which typically dictates commodity prices. The suit said Agri Stats knowingly played an important and active role in defendants’ collusive scheme outlined in the complaint.

“Agri Stats used the instrumentalities of interstate commerce to facilitate the conspiracy, and its conduct was within the flow of, was intended to, and did have a substantial effect on interstate commerce of the U.S., including in this District,” the complaint stated.

Antitrust expert Peter Carstensen has told Talk Business & Politics the liability in the case requires the plaintiffs show the industry players conspired and so far all the discovery has been public information. He said the case will likely hinge on private information such as emails, phone records, and memos if there are found.

“If the plaintiff can prove conspiracy or collusion, there is no defense,” he said.

Tyson Foods and Simmons Foods have said the claims are baseless and they will vigorously defend themselves against such litigation.

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