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Federal Court Denies Motions to Dismiss Turkey Price-Fixing Case

By Benjamin Mitchel, Lori Lustrin & Ilana Drescher on October 28, 2020
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On Monday, October, 19, 2020, Northern District of Illinois Judge Virginia M. Kendall denied three motions to dismiss a putative class action alleging that the nation’s leading turkey suppliers—including Butterball, Cargill, House of Raeford, Tyson, and Perdue—engaged in a conspiracy to fix the prices of turkey sold in the United States over a seven year period.  [1]

Like several other pending criminal and civil antitrust actions involving the meat industry, the class complaint alleges that suppliers constituting 95 percent of the turkey market engaged in information exchanges of confidential business information, including production and sales data. According to the complaint, the turkey suppliers used Agri Stats—a data compilation company that services the agricultural industry and markets itself as designed to help protein suppliers improve their profitability—as a mechanism for accessing current and future sensitive business information. Judge Kendall ruled that allegations that Defendants knew their competitors participated in Agri Stats and had the ability to decode the supposedly anonymized metrics were sufficient to allege a hub-and-spoke conspiracy—with the Defendants being the spokes and Agri Stats being the hub.

The order noted allegations of market dynamics that made the turkey industry particularly conducive to collusion—namely, relatively few suppliers, inelastic demand, and fungible products. The Court also referenced the complaint’s allegations that while the “gap between feed costs and turkey prices was significant” in the period immediately preceding the initiation of the Broiler Chicken antitrust case (which also asserts Agri Stats information sharing), “the price of turkey dropped precipitously” after the Broiler Chicken case began. The Court found that the complaint adequately alleged an anti-competitive effect—namely, price increases and slowed production—resulting from the information exchanged through Agri Stats.

We will continue to monitor and provide updates on this case and others relevant to our food and beverage clients.

[1] The Court’s Order resolved four motions to dismiss: a jointly filed motion by all Defendants; a motion by Farbest Foods Inc.; a motion by Cooper Farms, Inc.; and a motion by the Kraft Defendants. The Court denied all motions with the exception of Kraft’s motion. The Court concluded that because Kraft functioned more like a purchaser than a supplier of turkey, there was insufficient evidence to tie it to the alleged conspiracy.

Photo of Benjamin Mitchel Benjamin Mitchel
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Photo of Lori Lustrin Lori Lustrin
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Photo of Ilana Drescher Ilana Drescher
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  • Posted in:
    Food, Drug & Agriculture
  • Blog:
    The Food Court
  • Organization:
    Bilzin Sumberg
  • Article: View Original Source

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