First Tuna, Now Chicken Price Fixing
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.
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