Walmart Inc. sued several chicken suppliers on Friday, saying they conspired for at least eight years to inflate the price of broilers.
The world's largest retailer is the latest to file suit in federal court against the $30 billion chicken industry over antitrust violations, but Tyson Foods of Springdale, which has been sued by others, is not a listed defendant.
"By filing a complaint separate from the class action that began in 2016, we believe we can best protect our business and our customers from artificially increased costs," said Randy Hargrove, Walmart's senior director of corporate communications. "For more than 50 years, we've focused on giving our customers great deals with an everyday low cost mindset that is core to who we are."
The Bentonville retailer claims a number of chicken producers, including Pilgrim's Pride and Sanderson Farms, conspired to raise the price of broiler chickens by sharing proprietary data and curtailing supply from as early as 2008 through at least 2016.
Absent from Walmart's list of defendants are state producers George's Inc., Simmons Foods and Tyson Foods. The Arkansas chicken companies are defendants in several similar antitrust complaints filed in Illinois federal court.
Walmart reached a $20 million settlement with tuna supplier Starkist earlier this year in a separate price-fixing case.
Robert Steinbuch, a law professor at the University of Arkansas at Little Rock, said he did not know the specific business relationship between Walmart and Tyson, Simmons or George's, but offered two possible reasons for omission: it may be difficult to argue anti-competitive activity for them; or their relationships are of particular interest to Walmart.
Regardless, he said, "It is unusual."
The producers allegedly began to constrain trade and supply so to counter the traditional boom-and-bust cycle of raising chickens. According to the complaint, it was common to see producers ramp production in response to rising prices, which would cause a glut and lead to lower prices.
That pattern changed in 2008, when for the first time in decades, total broiler chicken production remained virtually unchanged from the year before. Data with industry publication Watt PoultryUSA show the industry's total weekly ready-to-cook 2008 production was 724 million pounds, slightly more than the 723.7 million pounds per week reported a year ago.
Walmart and plaintiffs in other courts allege that chicken producers conspired to restrict their output with help from Agri Stats, which reports in-depth production data anonymously, and a now-defunct chicken-price index that was susceptible to collusion, the Georgia Dock.
Food distributor Maplevale Farms filed the first civil complaint in 2016 in the Northern District of Illinois. Since then, add-on complaints seeking class-action status have been filed by grocers, food distributors, restaurants and food-packers, including Sysco Corp., Kroger, Olive Garden, and Kraft Heinz.
"Like dozens of other retailers and wholesalers, we filed suit objecting to anti-competitive behavior of poultry suppliers," Hargrove said.
When asked why Tyson and other parties are not listed in Walmart's complaint, Hargrove declined to discuss further details and referred to the claims listed in the filing for details.
Walmart is a major account for Tyson Foods.
According to a report filed Nov. 13 with the U.S. Securities and Exchange Commission, Walmart accounted for more than 17% of Tyson's consolidated sales the past three fiscal years. No other customer represented more than 10% of Tyson's fiscal 2018 sales.
For the year that ended Sept. 29, Tyson reported consolidated sales of $40 billion. Walmart was attributable for approximately $6.9 billion of that.
Privately held Simmons and George's both supply Walmart in some capacity with manufactured pet food or processed chicken.
Plaintiffs in the lawsuit include Walmart stores throughout the Southeast region and wholesale retailer Sam's stores. The defendants are Pilgrim's Pride, Koch Foods, Sanderson Farms, House of Raeford, Mar-Jac Poultry, Perdue Farms, Wayne Farms, OK Foods, Peco Foods, Harrison Poultry, Foster Farms, Claxton Poultry, Mountaire Farms, Amick Farms, Case Foods, and Agri Stats.
Walmart's 98-page complaint was filed in the Western District of Arkansas, Case No. 5:19-cv-05100.
Business on 05/29/2019