• Market Crumbs

First Tuna, Now Chicken Price Fixing


Image via William Moreland on Unsplash

In December, we wrote about the drama in the canned tuna industry. The price fixing scandal involving three major U.S. tuna producers colluding to inflate prices for years resulted in a bankruptcy, fines and a criminal conviction.


The scheme caused Bumble Bee to file for bankruptcy after pleading guilty to price fixing. The company was ordered to pay a reduced $25 million fine and cited "significant legal challenges" as the cause for bankruptcy. Bumble Bee's former CEO was found guilty for his role in the price fixing conspiracy and faces a maximum of 10 years in prison and a $1 million fine.


Starkist was ordered to pay a $100 million fine, while the third company—Tri-Union, got off the hook for being a whistleblower.


This week, we found out that the canned tuna industry wasn't the only one fixing prices. A grand jury in the U.S. District Court in Denver indicted four current and former chicken industry executives with one count of conspiring to fix broiler chicken prices from 2012 through 2017.


Shares of Pilgrim’s Pride, which supplies chicken to Costco and KFC, slid on the news as it was revealed current CEO Jayson Penn was indicted along with a former vice president of the company.

Two executives from Claxton Poultry Farms, which supplies chicken to Chick-fil-A, were the other two individuals indicted. One of them is a former Pilgrim’s Pride executive who joined Claxton Poultry Farms in 2012.


The indictment alleges executives from the two companies communicated non-public information with each other about negotiations with restaurants and grocers and submitted similar bids.


The Department of Justice said the four men are the first to be charged and the investigation is still ongoing. Each offense, which is the same the former Bumble Bee CEO was convicted of, carries a maximum penalty of 10 years in prison and $1 million fine.


"Particularly in times of global crisis, the division remains committed to prosecuting crimes intended to raise the prices Americans pay for food," assistant attorney general for the Department of Justice's Antitrust Division Makan Delrahim said. "Executives who cheat American consumers, restauranteurs, and grocers, and compromise the integrity of our food supply will be held responsible for their actions."


With the investigation still ongoing and rivals Tyson Foods and Sanderson Farms also dropping on the news, it remains to be seen if this price fixing conspiracy goes beyond just these two companies.


Leftover Crumbs

  • Jobless claims remain elevated. 1.87 million Americans filed for initial jobless claims last week, falling below 2 million for the first time since mid-March. This brings the total since the coronavirus outbreak to more than 42 million. Continuing claims rose by nearly 650,000 to 21.5 million. All eyes will now be on the May nonfarm payrolls report released today, where the unemployment rate is predicted to rise to nearly 20% from 14.7% in April.

  • Musk must not be a Prime member. Tesla co-founder and CEO Elon Musk took to Twitter to give his thoughts on Amazon. In response to a tweet that Amazon censored a book about COVID-19, Musk tweeted to Amazon CEO Jeff Bezos "This is insane." Musk followed the tweet with another, tweeting "Time to break up Amazon. Monopolies are wrong!"

  • Impossible foods goes direct to consumer. Impossible Foods announced its products will now be available for purchase directly from its website. The company will offer four different packages of its plant-based patties and ground product. The packs range in price from $50 to $70, which comes out to $0.96 per ounce to $1.23 per ounce. Impossible Foods' pork product is not yet available for sale on the website, while two-day shipping is included in the price.

  • Gap hit with lawsuit. Simon Property Group has filed a lawsuit against Gap, which is one of its largest tenants, for more than $65 million in unpaid rent and other charges. Gap said in late April it would stop paying rent on its closed stores, amounting to more than $115 million in monthly expenses. Simon, which is the largest mall operator in the U.S., counts 412 Gap stores, including Banana Republic and Old Navy, among its properties. Simon CEO said last month "The bottom line is, we do have a contract and we do expect to get paid."

  • Flight routes slashed. Fifteen U.S. airlines have been given approval by the U.S. Department of Transportation to temporarily suspend service to 75 domestic airports. All of the airports will continue to be served by at least one airline. United Airlines and Delta Air Lines were approved to suspend service to 11 airports each. Some of the notable cities that will see reduced flights include Aspen, Santa Barbara, Hilton Head and Key West.