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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Pilgrim’s Pride Corp and Tyson Foods Reach Settlement over Collusion Lawsuit

01/12/2021

Following the plea deal with the Federal Department of Justice (DOJ) in a criminal case alleging collusion, Pilgrim’s Pride agreed to a $110 million penalty.  Given the reality of the DOJ case, a negotiated settlement was entered into between Pilgrim’s Pride Corp. and the Plaintiffs in the civil lawsuit alleging collusion in the case referred to as Broiler Chicken Antitrust Litigation N.D. Illinois Case No. 1:16-cv-08637.

 

The revelation concerning Pilgrim’s Pride was contained in a January 11th Form 8K filing with the SEC detailing the $75 million settlement accompanied by the statement, “While Pilgrim’s does not admit any liability for the claims alleged in the “broiler antitrust litigation” it believes the settlement was in the best interest of the company and its shareholders.” This settlement is distinct from a parallel civil lawsuit alleging collusion by indirect purchasers including restaurant and QSR chains.


Pilgrim's Pride indicted ex-CEO

 

Concurrently media reports indicate that Tyson Foods has settled with the direct-claim Plaintiffs for an undisclosed figure. In June 2019 the Company entered into a leniency agreement with the DOJ when it discovered that two employees had apparently participated in anti-competitive activities leading to subsequent criminal indictments.

 

Pilgrim’s Pride Corp. did not admit any liability for the claims alleged in the broiler antitrust civil litigation. It is obvious that the co-colluding party in the criminal case, Claxton Poultry Farms will be obliged to settle and not risk trial.

 

In September 2018 Fieldale Farms Corporation settled without admitting wrongdoing and the Company agreed to settle for  $2.3 million and to cooperate with Direct Purchaser Plaintiffs in ongoing litigation against the non-settling Defendants

 

An important aspect of the case is that all of the Defendants had access to cost data circulated by  AgriStats® Inc a major U.S. benchmarking system which was at the time owned and operated by Elanco Animal Health a subsidiary of Eli Lilly, a major pharmaceutical company.  Plaintiffs allege that by becoming aware of their competitors’ production costs, it would have been possible for Defendants to make decisions concerning volumes of production and pricing.  Although this contention will be examined at trial, the cost of defending such an action is immense as experienced previously by the egg industry that faced civil antitrust lawsuits. 

 

The situation relating to other Defendants in the civil case will depend on documentation confirming whether collusion did or did not take place. It would have been injudicious for Pilgrim’s Pride to have defended a civil case given the DOJ settlement and the criminal charges against their CEO and his successor that would have placed he company in jeopardy for punitive damages. Tyson Foods was in a similar predicament given their admissions to the DOJ, a negotiated leniency agreement and also to have had ex-employees under indictment for alleged anti-competitive crimes committed.

 

The Agreements are subject to court approval.


 
Copyright © 2021 Simon M. Shane