The U.S. Department of Justice is interested in a civil antitrust case alleging the artificial inflation of chicken prices, according to Tyson Foods Inc.'s quarterly earnings report.
After three years of court filings on the matter, Tyson Foods on Monday updated investors on recent developments in the pending civil case, including a note that the Justice Department wants some information.
"Plaintiffs notified us on April 26, 2019 that the U.S. Department of Justice issued a grand jury subpoena to them requesting discovery produced by all parties in the case," Tyson said Monday in its quarterly filing with the U.S. Securities and Exchange Commission.
A subpoena signals "there's likely a price-fixing criminal investigation underway," said Robert Steinbuch, a law professor at the University of Arkansas at Little Rock.
"When the [Department of Justice] does a criminal investigation, it's a serious matter," he said.
In October, the Justice Department wrapped up a yearslong investigation into the "big three" tuna suppliers, Chicken of the Sea, Bumble Bee and Starkist. Chicken of the Sea was granted amnesty for blowing the whistle on the conspiracy, but Bumble Bee and Starkist pleaded guilty and faced fines of up to $100 million. They now face more than 70 civil lawsuits lodged by Target, Sysco and others. Starkist settled with Walmart earlier this year for $20 million.
The Justice Department did not return a message left Tuesday for comment on the chicken price-fixing case.
In a teleconference Monday morning, an analyst asked Noel White, Tyson's president and chief executive officer, for comment on the subpoenas.
"All I can say ... is that we're disappointed that it went this far, but I'm not going to make any comments on any pending lawsuits," White said.
Since food distributor Maplevale Farms filed the first civil complaint, alleging U.S. chicken packers conspired to "fix" the price of broiler chickens by cutting their production and supply and manipulating a now-defunct chicken price index, the Georgia Dock, others have filed add-on complaints seeking class-action status, including Kroger, Sysco and Hooters.
Plaintiffs allege chicken producers shared confidential production data, destroyed flocks of breeder hens and closed plants, to raise broiler prices by 50% over a 10-year stretch starting in 2008.
Defendants named in the antitrust case control about 90 percent of the wholesale chicken market, according to Illinois federal court documents. Four of them have headquarters in Arkansas -- George's Inc., Simmons Foods, OK Foods and Tyson Foods.
Currently, litigation is in the discovery phase and decisions on class certification and summary judgment motions filed by defendants are not expected before the latter part of 2020, according to Tyson's quarterly filing. A trial, if necessary, will come after that.
The district court consolidated the complaints on behalf of three classes: direct buyers; indirect buyers, or consumers; and commercial or institutional indirect buyers.
Supporters of the allegations claim they were duped for years by the chicken industry's artificially high prices. Critics remain skeptical of the claims and have called the plaintiffs' efforts a money grab.
The Springdale-based Tyson also faces civil antitrust price-fixing lawsuits involving pork and beef.
Business on 05/08/2019
Print Headline: Update on case in Tyson report