Risk & Compliance

Chicken Producer Execs Charged With Price Fixing

Four executives at Pilgrim's Pride and Claxton Poultry allegedly conspired to suppress competition by fixing the price of broiler chicken products.
Matthew HellerJune 4, 2020

Four top executives with two major U.S. chicken producers have been charged with conspiring to fix prices and rig bids for chicken products sold to grocers and restaurants.

The grand jury indictment announced Wednesday by the Department of Justice are the first in a still-open investigation involving several other major chicken producers.

According to the indictment, Pilgrim’s Pride CEO Jayson Penn and former vice president Roger Austin and two officials of Claxton Poultry Farms — Mikell Fries, the company’s president, and Scott Brady, a vice president — “engaged in a continuing combination and conspiracy to suppress and eliminate competition” by fixing the price of broiler chicken products between 2012 and 2017.

Pilgrim’s Pride is the country’s second-largest supplier of broiler chickens, which account for nearly all the chicken meat sold in the U.S. Its shares tumbled 12.4% to $18.29 on news of the indictment.

“Particularly in times of global crisis, the [DoJ’s antitrust division] remains committed to prosecuting crimes intended to raise the prices Americans pay for food,” Assistant Attorney General Makan Delrahim said in a news release.  “Executives who cheat American consumers, restaurateurs, and grocers, and compromise the integrity of our food supply, will be held responsible for their actions.”

As The New York Times reports, “Accusations of collusion have dogged the U.S. chicken industry since 2016, when Maplevale Farms, a food service firm in upstate New York, filed a lawsuit saying that Tyson Foods, Pilgrim’s Pride, Sanderson Farms, Perdue Farms and other companies had conspired to fix the price of broiler chickens.”

Maplevale claimed Tyson and Pilgrim’s led a scheme to destroy hens that breed new chickens, causing the wholesale price of broiler chickens to increase 50% despite a reduction in some of the key costs of chicken breeding.

“Penn, Austin, Fries, and Brady are the first to be charged in an ongoing criminal investigation into price fixing and bid rigging involving broiler chickens,” the DoJ said.

Brady is a former Pilgrim’s Pride executive who joined Claxton in 2012.

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