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The Justice Department has filed a civil antitrust lawsuit against meat data provider Agri Stats, charging it with organizing and managing anticompetitive information exchanges among broiler chicken, pork and turkey processors.
The complaint alleges that Agri Stats has violated Section 1 of the Sherman Act, an antitrust law, “by collecting, integrating and distributing competitively sensitive information related to price, cost and output among competing meat processors.
“This conduct harms customers, including grocery stores and American families,” the DoJ said in a statement.
While no individual companies were named in the statement and it’s not clear if some or all receive Agri Stats reports, the stocks of meat producers were mostly lower Thursday.
Tyson Foods Inc.
TSN,
fell 1%, Hormel Foods Corp.
HRL,
was down 0.2% and Conagra Brands Inc.
CAG,
was down 0.1%. Pilgrim’s Pride Corp.
PPC,
was up 0.2%.
None of the companies immediately responded to a request for comment.
The complaint was filed in the District of Minnesota, and alleges that Agri Stats has known for years that the reports it produces for participating meat processors are being used for anticompetitive purposes.
In some instances, Agri Stats even encouraged them to raise prices and reduce supply, it says.
“While distributing troves of competitively sensitive information among participating processors, Agri Stats withholds its reports from meat purchasers, workers and American consumers, resulting in an information asymmetry that further exacerbates the competitive harm of Agri Stats’ information exchanges,” said the DoJ.
The scheme has continued to this day in the chicken processing industry, among others, it added. The organization has paused its turkey and pork reporting after facing private antitrust suits, but has said it intends to resume that reporting as soon as the suits have been resolved.
“The Justice Department is committed to addressing anticompetitive information exchanges that result in consumers paying more for chicken, pork and turkey,” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in the statement.
Agri Stats was founded in 1985 at a kitchen table in Fort Wayne, Indiana, according to its website. Founder Jim Cox “started this business as a way to help industry participants make informed decisions based on accurate user data; delivered in a timely manner, and with the utmost confidentiality,” it says.
Cox, who died in May, started his career as a poultry consultant, working at Central Soya Company for 28 years before starting Agri Stats at the age of 50, according to his obituary.
The move comes at a time when some economists and many consumer advocacy groups are complaining about “greedflation,” or the practice of companies raising prices to protect their profit margins through the current inflationary environment.
Companies, including Tyson Foods, have on earnings calls touted their ability to raise prices, earning tidy profits and rewarding their shareholders as they go, according to the report from Accountable.US, a liberal-leaning consumer-advocacy group, as MarketWatch has reported.
On their first-quarter earnings call, Tyson executives touted the “significant pricing power of our portfolio with a year-over-year increase of 7.6%.” Tyson’s latest quarter included a surprise loss, as it was hit by weak demand for meat, along with plant closures and job cuts.
For more, see: Tyson Foods stock slides after meat producer swings to surprise loss
Tyson had net income of over $3.2 billion in 2022, up from $3 billion in 2021, and it rewarded shareholders with $1.35 billion in buybacks and dividends.
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