Three lawsuits filed against America’s largest beef packers can be consolidated, a Minnesota federal court ruled last week (July 10, 2019).
U.S. Magistrate Judge Hildy Bowbeer said in a nine-page order the court will oversee three proposed class actions filed by ranchers and industry groups that claim beef packers colluded to suppress prices and violated federal antitrust laws.
On April 23, 2019, R-CALF USA filed suit in Chicago against Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC, and certain of their affiliates alleging that from at least January 1, 2015 through the present, the packers conspired to depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits.
Three days later in a Minneapolis court the same packing companies were accused in a consumer class action lawsuit of a similar price-fixing scheme. That suit, Wright et al. v. Tyson Foods Inc. et al., claims all consumers who bought any fresh or frozen beef products may be entitled to reimbursement. The suit alleges the packers forced consumers to pay inflated prices for steak, hamburger and other beef products.
A third lawsuit was filed May 9, 2019, by Michael Sevy, who claims that, as a live cattle futures trader, he “suffered damages from a manipulated live cattle futures and options market.” The suit alleges, “Plaintiff suffered monetary losses by transacting in live cattle futures and options at artificial prices directly resulting from packing defendants’ conduct, including their suppression of fed cattle prices.”
Sevy’s lawsuit alleges the companies’ conduct had the effect of “manipulating the prices of live cattle futures and/or option contracts traded on the CME” in violation of the Sherman Act.
All three of the lawsuits allege beef packers colluded to suppress beef prices in part by agreeing to reduce slaughter volumes and curtailing purchases. The plaintiffs said the collusion caused an unprecedented drop in fed cattle prices in 2015.
Other price suppression tactics the meatpackers allegedly have deployed include importing large numbers of foreign cattle, purchasing cattle during a narrow 30- to 60-minute window on Fridays and slashing slaughter volumes.
Previously, Tyson spokesman Gary Mickelson said in a statement, "We’re disappointed this baseless case was filed. As with similar lawsuits concerning chicken and pork, there’s simply no merit to the allegations that Tyson colluded with competitors.”
A previous statement from Cargill said: "For many years, Cargill has served as a trusted partner to American cattle ranchers, committed to supporting their family farms and livelihoods. We believe the claims lack merit, and we are confident in our efforts to maintain market integrity and conduct ethical business.”
An obstacle to the success of these lawsuits is previous packer investigations, including a 2016 U.S. Senate Judiciary Committee review of the decline in cattle prices. The committee said it found no evidence of collusion.
And just last year the U.S. Government Accountability Office looked into the matter at the behest of the Judiciary Committee. The office reported that its analysis of the data "indicated that competition levels among packers that slaughter and process fed cattle did not appear to affect the national price changes in the fed cattle market."