June 10, 2020 613 PM
FAR WEST TEXAS — If you’ve bought chicken at a grocery store in recent years or even ordered it at a restaurant, there’s a chance you paid too much.
The U.S. Department of Justice last Wednesday indicted four chicken industry executives on antitrust charges for their alleged role in a scheme to fix prices, rig bids and artificially inflate the consumer price for chicken. The alleged scheme lasted for at least six years, from 2012 to 2017, according to a news release from the Justice Department.
The scale of the scandal is massive. Last week’s indictments involved, among others, the CEO and a former executive at Pilgrim’s Pride, one of the largest chicken producers in the country. The company produces and sells chicken domestically, abroad and even to local grocery chain Porter’s.
Meanwhile, other major chicken producers — including Tyson Foods and Perdue Farms — have been also subpoenaed in relation to the case. And some of their largest customers, from Walmart and Kroger to Sysco and Kraft, have all filed lawsuits over the alleged antitrust violations.
If the chicken producers are found to have violated antitrust laws, all those major food and grocery companies — and not just end consumers — could be determined to be victims in the alleged scheme to jack up prices. Porter’s, a potential victim of the scheme, confirmed in an email to The Big Bend Sentinel on Monday that it does carry Pilgrim’s Pride chicken products.
Ky Ellison, a spokesperson for Porter’s, declined to comment on the case, citing the ongoing litigation. “We do not wish to comment on issues that are not directly related to us,” he said. “We will trust our buyers and the justice system to do their job.”
Still, Ellison did offer context on why the chain buys from big name brands like Pilgrim’s Pride. Unlike larger grocery store chains, he said, Porter’s relatively small size limits which producers it can buy from. For example, the chain doesn’t have the resources to set up its own production operations, as larger companies might.
“We are limited by who we’re buying product from,” Ellison explained. “We can’t just go to someone locally and say, ‘We’ll buy all your chickens.’ There has to be a USDA inspector on-site.”
The Texas attorney general’s office also declined to comment on the situation. In an email, a spokesperson said they could not “confirm, deny or comment on potential or ongoing investigations.”
Regardless, the office did offer more context on how the price-fixing laws work in general in complex cases like these. If a grocery store chain was paying artificially high prices for chicken and was not involved in the alleged scheme, then they would likely also be considered a victim, according to the Texas attorney general.
In their indictment, federal authorities accused current and former executives at Pilgrim’s Pride, as well as those at another company — Claxton Poultry Farms — of a “conspiracy to suppress and eliminate competition” by fixing chicken prices. In the process, they allegedly “substantially affected” interstate commerce, authorities argue.
Authorities pointed to several pieces of evidence, including an alleged spreadsheet allowing companies to coordinate prices for chicken on the bone. They also pointed to multiple phone conversations and emails between the executives that allegedly served the same purpose.
In November 2013, for example, Scott Brady, the vice president of Claxton, allegedly texted the president, Mikell Fries, to discuss Pilgrim’s prices. Brady said Pilgrim was “not moving” its prices, and Fries told Brady to stay at its current prices, according to the indictment.
In another situation, from March 2013, Brady allegedly spoke to Pilgrim’s vice president, Roger Austin, about prices. Later, Brady allegedly told Fries that Pilgrim’s Pride — ostensibly a competitor — was “in agreement with us” on prices.
In a statement about the indictments, the DOJ condemned the alleged scheme, which they said “hurts consumers and undermines our economic system.” If convicted, the executives could face a maximum of 10 years in prison.
“Particularly in times of global crisis, the division remains committed to prosecuting crimes intended to raise the prices Americans pay for food,” Makan Delrahim, assistant attorney general for the DOJ’s antitrust division, said in a statement. “Executives who cheat American consumers, restaurateurs and grocers, and compromise the integrity of our food supply, will be held responsible for their actions.”
Pilgrim’s Pride did not respond to a request for comment. In an email, a lawyer for Claxton Poultry Farms said the allegations were “without merit” and that he planned to “vigorously defend our company and its good name.”
“Since our small start in 1949, we have adhered to the highest standards of food quality, professionalism, integrity and good faith in all our operations,” he added. “We will not comment further on the allegations.”