US – Poultry processors Cargill Inc., Sanderson Farms, and Wayne Farms have all been collectively fined US$84.8 million after conspiring to share employee wage and benefit information with one another, in violation of federal antitrust laws.
The Antitrust Division of the U.S. Department of Justice (DOJ) had filed a civil complaint in the US District Court for the District of Maryland alleging that poultry processors, Cargill Inc. and Cargill Meat Solutions Corporation, Sanderson Farms Inc., and Wayne Farms LLC, engaged in a decades-long conspiracy.
The companies were collaborating to suppress compensation to poultry processing plant workers by exchanging competitively sensitive information about wages and benefits and collaborating on compensation policies.
The DOJ alleged that Cargill, Sanderson Farms, and Wayne Farms, close competitors for labor services in the poultry sector, collectively possessed buyer market power (monopsony power) in that relevant nationwide labor market.
The conspiracy had the involvement of data consulting firm Webber, Meng, Sahl and Company (WMS) as the companies’ information broker, as well as the firm’s president, G. Jonathan Meng.
The data consulting firm is accused of facilitating the alleged scheme to share details about processing plant workers’ wages and benefits.
The DOJ entered a proposed consent decree to settle the action with the defendants, in which the poultry processors committed to pay US$84.8 million in restitution, and the defendants are prohibited from engaging in certain conduct for 10 years.
In addition, WMS is prohibited from providing surveys or other services that facilitate the sharing of competitively sensitive information in any industry.
WMS President G. Jonathan Meng is also subject to the terms of this consent decree in his individual capacity.
The consent decree with Sanderson Farms and Wayne Farms also imposes additional restrictions on deceptive practices in poultry markets.
This will include using a “tournament system” to adjust the poultry grower’s “base payment” in relation to how well the grower performed relative to other growers.
DOJ Antitrust Division Principal Deputy Assistant Attorney General Doha Mekki said in a statement: “Through a brazen scheme to exchange wage and benefit information, these poultry processors stifled competition and harmed a generation of plant workers who face demanding and sometimes dangerous conditions to earn a living.”
The DOJ added that if the deal is approved, the poultry processors will be barred from “sharing competitively sensitive information about poultry processing plant workers’ compensation.”
The proposed consent decree with Sanderson Farms and Wayne Farms would also resolve alleged violations of the Packers and Stockyards Act, which prohibits deceptive practices in poultry markets.
This settlement comes on the heels of several price-fixing prosecutions in the poultry industry involving four major US meat processors including Cargill.
The lawsuit filed by Sysco claimed that since early 2015, the meat processors “exploited their market power in this highly concentrated market by conspiring to limit the supply, and fix the prices, of beef sold to Plaintiff in the US wholesale market”.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro-industry. SUBSCRIBE HERE.