WASHINGTON — Judge Thomas Durkin of the U.S. District Court for the Northern District of Illinois on June 27 granted the Department of Justice (D.O.J.) leave to intervene in the broiler chicken anti-trust case currently before the court (Maplevale Farms, Inc., et al., versus Koch Foods, Inc., et.al). In his ruling, Judge Durkin further ordered a three-month stay of discovery, until Sept. 27, in connection with the civil lawsuit, which alleges that the nation’s largest poultry processors conspired to fix broiler prices between 2008 and 2016.
The D.O.J. motion, filed on June 21, confirmed that the government has launched a criminal investigation into allegations that leading poultry processors have conspired to fix poultry prices.
The reasoning behind the D.O.J. motion was that it was in the public’s interest that the government’s criminal investigation into the price-fixing allegations should take precedence over civil litigation.
“Although the public also has an interest in the ‘prompt disposition of civil litigation,’ that interest is generally outweighed by the public’s interest in effective law enforcement,” the motion stated.
The D.O.J. pointed to the substantial overlap between civil and criminal investigations of the price-fixing allegations.
“Although the requested stay may cause some short-term delay, granting the stay and allowing the grand jury investigation and any subsequent charges to streamline the Court’s workload may significantly enhance judicial economy,” the D.O.J. noted.
The D.O.J. said the government was committed to work expeditiously toward making criminal charges should that prove warranted.
Food distributor Maplevale Farms filed the underlying antitrust lawsuit on Sept. 2, 2016, against Tyson Foods, Koch Foods, Perdue Farms, Sanderson Farms and other poultry processors. Maplevale Farms and co-plaintiffs alleged that the defendants conspired as early as January 2008 to “fix, raise, maintain and stabilize the price of broilers…”
The lawsuit asserted “the principal (but not exclusive) method by which defendants implemented and executed their conspiracy was by coordinating output and limiting production with the intent and expected result of increasing prices of broilers in the United States. In furtherance of their conspiracy, defendants exchanged detailed, competitively sensitive and closely guarded non-public information about prices, capacity, sales volume and demand, including through third party co-conspirator Agri Stats.”
Agri Stats, Fort Wayne, Ind., a subscription-only information provider owned by Eli Lilly and Company, maintains an extensive database on the poultry industry. Much of the information contained in the database was provided directly by subscribing companies. Only poultry processors that supply data to Agri Stats and subscribe to the service may receive the Agri Stats poultry reports.
Agri Stats is the only defendant in the Maplevale Farms anti-trust suit that is not a broiler processor. Judge Durkin ruled in February against a motion by Agri Stats to have the antitrust allegations made against it in the suit dismissed. Judge Durkin said, “Plaintiffs plausibly alleged facilitation by alleging that Agri Stats’ reports are so detailed that the ostensible anonymity of the information is breached, and defendants were able to use the reports to communicate their broiler production intentions, thereby conspiring to fix broiler prices.”
Several other antitrust lawsuits alleging poultry processors have conspired to raise broiler prices have been filed separately by retailers, restaurants and other food distributors in the past couple of years.
Tyson Foods, Inc., Springdale, Ark., said, “We are aware of the Department of Justice’s request, which does not change our view that there is simply no merit to the allegations that Tyson Foods colluded with competitors. We remain committed to vigorously defending ourselves against these baseless allegations.”
A spokesperson for Sanderson Farms, Inc., Laurel, Miss., also a defendant in the case, said, “The company continues to believe the civil plaintiffs’ claims as to Sanderson Farms are wholly without merit, and we are committed to defending the case vigorously.”
The D.O.J. investigation, should it uncover criminal wrongdoing, raised the possibility of charges, fines and even prosecution of corporate executives, as was the case with the agency’s investigation into price-fixing in the canned tuna fish industry.
That investigation was launched in 2015 by the San Francisco offices of the D.O.J.’s Anti-Trust Division and the Federal Bureau of Investigation. Six criminal charges resulted. Bumble Bee Foods L.L.C. in May 2017 pleaded guilty for its role in fixing the prices of shelf-stable tuna fish sold in the United States and agreed to pay a $25 million fine. StarKist Co. in October pleaded guilty in the same case and was fined $100 million. Chicken of the Sea was exempted from criminal prosecution because it cooperated with the investigation.
Additionally, four executives were indicted for participating in the price-fixing conspiracy, including Christopher Lischewski, former president and chief executive officer of Bumble Bee Foods.