McDonald’s served a group of pork suppliers an antitrust suit, claiming that the pig farmers conspired to raise and maintain high pork prices.
McDonald’s said in its Friday complaint that it has been paying more than it should for its ham, sausage and bacon products after pork processing plants Clemens, Hormel, JBS Foods USA, Seaboard Foods, Smithfield Food, Triumph Foods and Tyson Foods teamed up with data sharing service Agri Stats to coordinate control over the supply and price of pork.
According to the fast food company, the pork producers began their price-fixing scheme in 2008 or early 2009, agreeing to share detailed, sensitive information about prices, capacity and demand through Agri Stats to increase pork prices.
Agri Stats gave “benchmarking” reports to the pork producers named in the suit, McDonald’s claimed, which allowed the companies to compare their profits to one another without sharing the data with the public.
McDonald’s claimed that Agri States collected and distributed supply and pricing data among the pork producers on a weekly and monthly basis, allowing the companies to coordinate their scheme, monitor production and choke off the supply, raising prices.
Agri States charged the pork companies “millions” to receive the data, which was only made available to producers on the plan, McDonald’s said.
“While defendants went to great lengths to keep the existence of the conspiracy a secret, they admitted in public calls that they had discussed production cuts at least once, and publicly signaled to each other that no supply increases would happen,” McDonald’s claimed.
The fast food company is asking the court to award damages and find that Agri Stats and the pork producers violated federal antitrust law.
Smithfield told Law360 on Monday that it was not surprised by the suit as the company has previously faced other identical claims, adding it will continue to maintain its innocence.
“As you may know, settlements were reached — in which we denied any wrongdoing — in antitrust cases spanning multiple classes. This is not unexpected and mirrors claims by other groups that opted out of the settlements,” a representative from Smithfield said.
McDonald’s, Agri Stats and the other pork producers did not immediately respond to requests for comment Monday afternoon.
Smithfield and many other pork processing companies faced nearly identical claims in a large multidistrict case, In re: Pork Antitrust Litigation .
However, a Minnesota federal judge found in August 2019 that, except for Smithfield, there was no proof that the meat companies intentionally restricted their supply, only evidence that pork supply had dwindled.
“It is clear that the pork industry as a whole saw a decrease in production in various years following 2009,” the judge said. “But plaintiffs have not adequately pleaded that this decrease was the result of consciously parallel conduct undertaken by the specific defendants they accuse.”
JBS and Smithfield later reached settlement agreements with consumers in the case.
McDonald’s is represented by Philip J. Iovieno, Nicholas A. Gravante, Jr. Lawrence S. Brandman, Jack G. Stern, Gillian Groarke Burns, Mark A. Singer, Elizabeth R. Moore and Zygimante Andrijauskaite of Cadwalader, Wickersham & Taft LLP.
Counsel for Agri Stats and the pork producers was unavailable Monday.
The case is McDonald’s Corporation v. Agri Stats Inc. et al., case number 1:22-cv-07182, in the U.S. District Court for the Eastern District of New York.
Read more at: https://www.law360.com/articles/1552666/mcdonald-s-hits-pork-suppliers-with-price-fixing-suit?copied=1
