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Pork Producers Anticompetitive Conspiracy Class Action

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Three Pieces of Raw Pork

The complaint for this class action details what it alleges is an anticompetitive conspiracy among the principal pork producers and a provider of statistics that has allowed them to raise pork prices since 2009. The complaint claims that the conspiracy violates federal antitrust laws.

The class for this action includes all persons or entities who bought pork directly from the defendants or their co-conspirators, from January 1, 2009 through the present.

The complaint claims that the pork industry is unusually concentrated, with Clemens Food Group, LLC, Hormel Foods Corporation, Indiana Packers Corporation, JBS USA, Seaboard Foods, LLC, Smithfield Foods, Inc., Triumph Foods, LLC, and Tyson Foods, Inc. controlling over 80 percent of the wholesale market. (The pork industry here means the industry for pig meat in all its forms, including fresh and frozen meat, ham, sausage, and bacon.)

According to the complaint, the conspiracy among the producers was facilitated by Agri Stats, Inc., which provided “benchmarking” reports that allowed the companies to exchange confidential information. This was not the first time Agri Stats had done this, the complaint says; it alleges that Agri Stats participated in a similar scheme in the broiler chicken industry and that it offered a similar scheme to the pork producers.

The complaint claims that the pork reports were far more detailed than normal benchmarking reports, carrying information that is not normally shared in a truly competitive market. It says that Agri Stats provided pork producers with current and forward-looking information, such as profits, costs, prices, and slaughter information in ways that enabled them to identify the sources of the data and enable them to monitor each other’s production.

According to the complaint, the primary way the companies executed their conspiracy was by coordinating output and limiting production, which resulted in higher pork prices. It therefore relied on the regular and detailed nature of Agri Stats information. This information was not publicly available; it is obtained only through a subscription with Agri Stats.

The complaint claims that the pork companies “admitted in public calls that they had discussed production cuts at least once, and publicly signaled to each other that they would not raise their capacity.”

In addition to concentration, the complaint says, the pork industry had other features that worked in favor of anticompetitive behavior, including high barriers to entry, substantial vertical integration, inelastic demand, and a lack of sufficient substitutes for pork. Charts are included in the complaint to show that, during the period of the conspiracy, the risk of price variations shifted almost entirely to pork farmers, while the pork producer defendants’ profits rose steadily.

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