Smithfield Foods will pay $42 million to caterers and restaurants to settle a lawsuit in which it was accused of conspiring inflating pork prices. This will likely increase concerns about the impact of a lack of competition on the meat industry’s prices.
Lawyers began notifying affected companies Tuesday. Smithfield had previously settled with another group of pork buyers for $83million, and JBS agreed that the restaurant and caterers would be paid $12.75 million in the lawsuit against JBS. JBS had also announced earlier this year that it would pay $52.5million to settle a similar beef price fixing lawsuit.
Smithfield and JBS did not admit any wrongdoing in the settlements. Smithfield headquarters in Virginia declined comment.
Other price-fixing lawsuits against chicken producers have been filed, with almost $200 million in settlements approved in price-fixing cases.
Pilgrim’s Pride Corporation was one of the largest chicken producers in the country. It is based in Greeley in Colorado. In February 2021, Pilgrim’s Pride Corporation pleaded guilty to conspiring in order to fix prices and rig biddings for broiler chicken products.
Smithfield was sued by restaurant companies as well as other meat processors, who together control over 70% of pork production. These suits alleged that Smithfield and other meat processors coordinated efforts to reduce the supply of pork and increase prices between 2009-2012.
Other major pork producers are still being sued, including Tyson Foods Seaboard Foods, Tyson Foods, Seaboard Foods, Triumph Foods and Agri Stats. They allegedly shared confidential information about price and capacity with each other.
According to the suit, private information contained in these reports allowed rivals to compare their profits and helped control the price and supply of pork.
The meat industry claims that prices are driven by supply-and-demand, not anticompetitive behaviour. However, the White House, prominent members of Congress, and trade groups have questioned the industry’s practices.
Analysts are concerned about the double-digit price rises in meat products since the outbreak of the pandemic, as the cost of food continues to rise. It has reached its highest level in over 40 years.
Ricardo Salvador, a scientist at the Union of Concerned Scientists, an advocacy non-profit group, stated that they are clearly profiting. They’re profiteering and they’re not the only ones who notice that.
According to Tyson’s quarterly reports, Tyson, the largest meat processor in the country, made a profit of $3 billion in 2021. The company made more than $1 billion profit in the last quarter, according to reports.
Biden’s administration announced several initiatives to increase competition in the industry to lower food prices, including a $1B plan to expand independent slaughterhouses.
The U.S. The U.S. Departments of Justice and Agriculture created a website earlier in the year to help farmers and ranchers report concerns about anticompetitive behaviour in the industry.
Although a hearing is being held by a Minnesota federal judge to decide whether the Smithfield settlement should be approved, he has already given it preliminary approval in April.
Blaine Finley, one of the plaintiffs’ lawyers, stated that they look forward to moving for final approval to their settlement with Smithfield, and continuing to litigate alongside the remaining defendants.
