According to the allegations, top executives at Pilgrim's Pride Corp., Claxton Poultry Farms, Tyson Foods Inc., Perdue Farms Inc., Koch Foods Inc., and George's Inc. colluded between 2012 and 2019 – a period longer than initially suspected by the DoJ – to price-fix and bid-rig contracts for chicken nuggets, breast fillets and wings sold to both restaurant chains and grocery stores throughout the United States.
Among those charged is Bill Lovette, the former CEO of Pilgrim's Pride, who retired in March 2019. Jayson Penn, another former Pilgrim's CEO who exited the company last month, is also facing charges.
According to the DoJ, which is also probing the drug industry for price-fixing, Pilgrim's and Claxton exchanged prices and other confidential details during the bidding process on chicken supply deals for a number of major restaurant chains. Tyson, the nation's largest chicken company by sales, also participated in the scheme.
Other executives included in the sweep are Timothy Mulrenin, a Perdue sales executive who previously worked at Tyson; William Kantola, a sales executive at Koch; Jimmie Little, a former Pilgrim's sales director; Gary Brian Roberts, a Case Farms employee who previously worked at Tyson; and Rickie Blake, a former director and manager at George's.
Tyson, which had previously disclosed to the DoJ that some of its employees were involved in the scheme under the agency's federal corporate leniency program, is thus far the only company that appears to be cooperating with the investigation.
"Executives who choose collusion over competition will be held to account for schemes that cheat consumers and corrupt our competitive markets," stated Makan Delrahim, the DoJ's top antitrust official, about the investigation.
How many other industries are engaging in illegal price-fixing?
According to the DoJ, each of the aforementioned individuals maintained some kind of illicit relationship with one or more of the others, despite all working for each other's competitors. Executives and employees of these companies had allegedly exchanged text messages during the bidding process for chicken products, which is a form of anti-competitive behavior.
When one company would be in negotiations with a restaurant or grocery store, for instance, employees or executives would communicate with their competitors to jointly drive up prices as high as possible, the indictment alleges.
Though none of the company names are actually mentioned in the indictment, people familiar with the probe confirmed their identities to the media.
In one instance back in May 2016, a food distributor had sought longer terms for credit lines with chicken suppliers. A Koch employee reportedly emailed Lovette at Pilgrim's right away to ask he if he had heard about it.
"Yes, we told them NO!" Lovette responded.
"OK. Then I am 100 percent on board. If that changes can you please tell me?" Lovette asked in return.
"Will do," Lovette then said.
Earlier in 2013, a restaurant chain had contacted Little, then at Pilgrim's, as well as an employee at Tyson's, to ask about frozen chicken prices. The Tyson employee proceeded to contact Little, as well as Kantola from Koch's, to discuss the request, after which Little came to the determination that he could safely charge the restaurant an additional fee of 3 cents per pound to freeze the chicken without losing the contract.
Supermarket chains Walmart Inc., Kroger Co., and Albertsons Co. have all encountered similar price-fixing schemes among the major chicken suppliers, which is why they have all at some point sued the chicken industry for conspiring to jack up poultry prices.
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