There's this great scene in the classic movie Casablanca where Vichy France's prefect of police Captain Louis Renault is compelled by the Germans to shut down Rick's Café Americain:
RENAULT: Everybody is to leave here immediately! This cafe is closed until further notice! Clear the room at once!
RICK: How can you close me up? On what grounds?
RENAULT: I am shocked, shocked to find that gambling is going on here!
This display of nerve leaves Rick at a loss. The croupier comes out of the gambling room and up to Renault. He hands him a roll of bills.
CROUPIER: Your winnings, sir.
RENAULT: Oh. Thank you very much.
Given Big Meat's history of bending and breaking laws over the last century, Renault would have to declare with tongue firmly planted in cheek that he's shocked, shocked, SHOCKED that a new complaint alleges the nation's four largest meat packers – Tyson Foods, JBS USA, Cargill and National Beef – of banding together to fix beef prices by suppressing the number of cattle slaughtered since 2015.
You might recall beef isn't the only meat that's had a target on its backside when it comes to price-fixing lawsuits:
- Last September, Tyson Foods and Perdue Farms forked over $35 million to settle — you guessed it — a lawsuit accusing the packers of colluding to keep farmer compensation depressed and boost corporate earnings.
- Last month, Smithfield Foods and JBS coughed up $54.75 million to settle a lawsuit accusing the packers of conspiring to inflate pork prices.
Tyson Foods, Perdue Farms, Smithfield Foods and JBS all declined to admit any wrongdoing.
While a lot of money to you and me, for Big Meat these settlements are just part of doing business. But what might happen if Big Meat really got burned by a price-fixing lawsuit combined with being found guilty by the Justice Department of price fixing?
Perhaps Sysco Corporation v. Cargill Inc. et al will be the complaint that finally convinces Big Meat that crime don't pay.
The complaint, filed in Texas Southern District Court, says: “Defendants colluded during the Conspiracy Period to reduce supplies of beef in tandem thereby raising and fixing beef prices at levels higher than prices that would have prevailed had the beef market been competitive. As a direct result, Plaintiff suffered antitrust injury by paying illegally inflated prices for beef it purchased from Defendants.”
Notable in the complaint is a claim that Sysco has an unnamed star witness who once worked in the meat industry willing to confirm the alleged conspiracy between the meat companies.
“As confirmed by Jason F. (Witness 1), based on conversations with James Hooker, head of fabrication at Swift’s Cactus plant, each of the Operating Defendants expressly agreed to periodically reduce their respective purchase and slaughter volumes, resulting in wholesale prices above competitive levels. Witness 1 is a former employee of Swift. He worked for Swift as a quality assurance officer (‘QA’) at Swift’s Cactus, Texas slaughter plant. He worked there for over ten years until his employment ceased in early 2018.”
That's intriguing. I imagine the four Big Meat packers are in talks with Sysco to see if settlements can be reached. Certainly Big Meat doesn't want this case to be decided by a jury.
Nonetheless, the complaint ratchets up the pressure. Big Meat is already circling the wagons against a potential federal price-fixing indictment. The Department of Justice has quietly been investigating Big Meat since 2020 for potential collusion. At least two bills have been introduced in Congress in an effort to rein in Big Meat monkey shines.
The Cattle Price Discovery and Transparency Act of 2022 would mandate cash trade and increase market transparency. The Meat Packing Special Investigator Act would create the Office of the Special Investigator for Competition Matters within the U.S. Department of Agriculture's (USDA) packers and stockyards division.
Hopefully, this witches' cauldron of DOJ investigation, Sysco lawsuit and congressional lawmaking can put an end to Big Meat price fixing that trickles down to inflated prices at the grocery meat counter.
About Dave Dickey
Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for Investigate Midwest covers agriculture and related issues including politics, government, environment and labor. His opinions are his own and do not reflect Investigate Midwest. Email him at email@example.com.