MINNEAPOLIS--(BUSINESS WIRE)--A federal class-action lawsuit has uncovered a nationwide antitrust overpricing scheme enacted by the leading food conglomerates of the $20 billion pork industry, who forced consumers to pay high prices for bacon, ham, hotdogs and other pork products, according to the law firm bringing the case, Hagens Berman.
The lawsuit filed June 28, 2018, in the U.S. District Court for the District of Minnesota states that the price-fixing scheme has been carried out by the biggest named in the industry who control approximately 80 percent of the market. Attorneys say Tyson, Hormel and other major meat companies have been bilking consumers in all states since 2009 by systematically controlling their output, in lock-step.
Affected brands include, but are not limited to, Ball Park Franks, Bosco’s, Craft Meats San Francisco, Hillshire Farm, Hormel, Jennie-O, Jimmy Dean, Lloyd’s Barbeque, Nathan’s Famous, SaraLee, Smithfield, SPAM, Steak-eze, Tastemakers and Tyson.
“Hardworking families across the nation strive to put food on the table, but little do they know, the game is rigged from the beginning: the largest food companies are secretly ensuring their dollar doesn’t go as far at the supermarket as it should,” said Steve Berman, managing partner of Hagens Berman, the law firm representing consumers in the lawsuit against the pork industry. “We’re seeking to hold Tyson, Hormel and others accountable for this nearly decade-long scheme to hog their share of profits.”
The lawsuit states that along with Tyson and Hormel, Agri Stats Inc., Clemens Food Group, Indiana Packers Corporation, JBS USA, Seaboard Foods LP, Smithfield Foods Inc. and Triumph Foods LLC “entered into a conspiracy from at least 2009 to the present to fix, raise, maintain and stabilize the price of pork.”
“The principal (but not exclusive) method by which defendants implemented and executed their conspiracy was by coordinating their output and limiting production with the intent and expected result of increasing pork prices in the United States,” the suit reads. “In furtherance of their conspiracy, defendants exchanged detailed, competitively sensitive, and closely guarded non-public information about prices, capacity, sales volume and demand through their co-conspirator Agri Stats.”
Beginning in 2009, the pork industry showed abnormal price movements, according to graphs in the lawsuit. Aggregate prices published by the USDA show the hog market year average price was at or below $50 every year between 1998 and 2009, before increasing to $76.30 cents per pound in 2015, an increase of more than 50 percent.
How the Pork Overpricing Scheme Began
In 2009, according to the lawsuit, Agri Stats began supplying “highly sensitive ‘benchmarketing’ reports” to the pork industry’s kingpin corporations. These reports allowed competitors to compare their profits and performance, but unlike typical industry reports of this nature, Agri Stats’ reports showed detailed financial and production data from each player and customized the information in a way that “bears all of the hallmarks of the enforcement mechanism of a price fixing scheme,” according to the lawsuit.
On a weekly and monthly basis, Agri Stats provides the pork companies named in the lawsuit with current and forward-looking sensitive, non-public information including profits, costs, prices and slaughter information, as well as regularly provides the keys to deciphering which data belongs to which producers. This allowed the companies to monitor each other’s production and control supply and price.
The lawsuit states that the defendant companies paid millions of dollars since 2009 to subscribe to Agri Stats’ reports.
Agri Stats’ reports were also placed at the center of a price-fixing lawsuit involving the broiler chicken industry, in which they had the same outcome: to reduce strategic uncertainty in the market, changing the incentives of competitors to compete, and inducing them to illegally cooperate to drive up prices. Agri Stats marketed its “benchmarketing” report subscription to the pork companies as a way to increase profit, saying, “…the ultimate goal is increasing profitability…”
“Once Agri Stats got everyone in the pork industry to put their card on the table, there was no competition,” Berman said. “When you’re aware of every move your competition is making, the only step left is to form an alliance, and that’s exactly what happened here.”
“We believe this a class antitrust operation, with the sole purpose of increasing profits for these companies orchestrating the scheme,” he added.
With this information, the pork industry’s top players were kept in control, dominating the vast majority of the market. High barrier of entry forced out new competitors.
Find out more about the lawsuit against the pork industry on behalf of consumers in the U.S.
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with ten offices across the country. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List eight times. More about the law firm and its successes can be found at https://www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.
