Poultry Industry Executives Indicted for Price Fixing

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A federal grand jury has indicted four executives from major poultry companies for conspiring to fix prices and rig bids for broiler chickens from 2012 to 2017.

A grand jury for the U.S. District Court in Denver handed down the indictments against Jayson Penn, president and CEO of Pilgrim’s Pride, along with Roger Austin, a former vice president of Fresh Foodservice at Pilgrim’s Pride Inc. Also indicted were executives for Claxton Poultry Farms in Georgia, including Mikell Fries, president of Claxton Poultry Farms and grandson of the company’s founder, along with Scott Brady, vice president of national accounts for Claxton Poultry Farms.

The Justice Department noted the four executives are the first to be charged in price fixing and bid rigging in the broiler-chicken industry in an ongoing criminal investigation. The Justice Department stated multiple federal agencies continue to collaborate on an investigation into the industry.

The indictment stated the four executives “together with their co-conspirators” operated in a network of suppliers “to suppress and eliminate competition though rigging bids and fixing prices and price-related terms for broiler chicken products sold in the U.S.”

The one-count indictment charged four current and former senior executives from two major broiler-chicken producers with conspiring to fix prices and rig bids for broiler chickens. Broiler chickens are chickens raised for human consumption and sold to grocers and restaurants.

The indictment alleged the price fixing goes back to at least 2012 and points to repeated text communications between Austin, Brady and Fries over bids and prices for poultry contracts or overall market prices. The texts also repeatedly reference communications back to Penn as well. Those communications for bids on prices continued repeatedly until at least 2017.

The indictment stated the business practices of the four executives “substantially affected interstate trade and commerce.”

Colorado-based Pilgrim’s Pride is one of the largest poultry companies in the country, citing on its website the company produces nearly one in five chickens in the U.S. Pilgrim’s Pride has operations in 14 states and employs about 39,000 people in the U.S. In February, Pilgrim’s Pride reported $11.4 billion in sales for fiscal year 2019 and operating income of $691 million. Pilgrim’s Pride is listed on the NASDAQ exchange, but Brazilian-based JBS owns more than 78% of common stock in the company.

Claxton is a family-owned operation based in Georgia but is listed as one of the 100 largest poultry companies globally. A 2016 article naming Fries as the president cited Claxton employed more than 1,800 people at that time and processed more than 2.1 million birds every week.

“Ensuring the integrity of competition in agricultural markets in order for producers to receive competitive prices for their products, and to prevent consumers from being cheated, is of the utmost importance to USDA OIG, and we will continue to dedicate resources to the investigation of matters involving such potential of competitive harms,” said Special Agent in Charge Bethanne M. Dinkins of USDA’s Office of Inspector General.

Just last month cattle organizations, state attorney’s generals and lawmakers were successful in requesting the Justice Department investigate price fixing by the big 4 beef packers. A class action lawsuit is also ongoing against Tyson Foods, JBS, Cargill and National Beef.

 

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DTN / Northern Ag Network


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