- The Department of Justice’s antitrust division sent investigative inquires to Tyson Foods, JBS SA, Cargill and National Beef following anti-competitive accusationsâ€‹, according to Bloomberg.
- The four companies are the largest meatpackersÂ in the U.S., controlling more than 80% of beef processing. The DOJ is reportedly in contact with state attorneys general about the inquiry.
- National Beef told Bloomberg it received the investigative demand from the Justice Department but said “the request was very narrow in scope, which leads us to believe that the DOJ does not necessarily believe there is an antitrust issue.”
The largest beef processors in the U.S. receiving subpoenas for an antitrust probe is the latest issue for these companies.Â The meat industry has found itself embroiled in turmoil in recent weeks as it faces worker safety concerns and antitrust accusations amid the pandemic.Â
The USDA is already investigatingÂ why a rise in beef prices due to pandemic hoarding didn’t translate into higher profits for farmers. But many thought a USDA probe wasn’t enough.Â
About two months ago,Â cattle associations in 23 states sent a letter urging U.S. Attorney General William Barr and the DOJ to launch its own investigation into possible anti-competitiveÂ actions in the meat industry.Â Several senatorsÂ and 11 state attorneys general also pushed the DOJ to investigate.Â After receiving all of that,Â President Donald Trump said he asked the DOJ to go forward.Â
As coronavirus started to spread across the country in March,Â meat sales roseÂ as consumers stockpiled,Â but that boost didn’t increase producers’ profits. Wholesale prices for processed beef jumped almost 20%Â at the start of the pandemic, while the price paid to ranchers dropped 11%, according to the Food & Environment Reporting Network’s Ag Insider.
Consolidation across the beef industry has led to concerns over the years about the authority companies have over suppliers when it comes to prices.Â Last year, the Ranchers Cattlemen Action Legal Fund United Stockgrowers of America and other cattle ranchers filed a class action lawsuitÂ accusing the beef companies of conspiring to minimize prices paid to ranchers for cattle to inflate their own profits. R-CALF USA’s CEO Bill Bullard told the Capital Press in March that the case is pending and has been joined by the National Farmers Union.
These subpoenas conclude an especially turbulent week for the meat industry. Current and former top executives at Pilgrimâ€™s PrideÂ and Claxton Poultry Farms were indicted on Wednesday on charges of conspiracy to fix prices on chickens sold to grocers and restaurants between 2012 and 2017.Â Those were the first charges from DOJ’s investigation into the chicken industry, which was disclosed last year when the department intervenedÂ in a price-fixing class action lawsuit that involvedÂ Pilgrim’s Pride,Â Perdue Farms, Tyson and Sanderson Farms.Â Poultry companies have faced multipleÂ similar civil lawsuitsÂ in the past, and an investigation by the U.S. Securities and Exchange Commission.Â
Price-fixing and antitrust accusations and investigations have gone on across the food industry in recent years with other lawsuits involving dairy,Â tunaÂ and pork. Many of these cases have ended with guilty defendantsÂ and large settlements.Â
At a time when coronavirus is still spreading in meat plants and supply issues could continue,Â scrutiny on the meat industry is continuing to mount. After plant closedÂ because thousands of workers tested positive for coronavirus,Â Trump issued an executive order to keep doors open and the meat supply chain flowing. Although critics have cautioned that workersÂ are still at risk in these plants, many have resumed production and stayed open despite opposition.
If workers continue to get sick and criminal charges are filed from this latest probe,Â the struggles facing these meat companies may be just getting started.Â