“Big Chicken” and the Recent Mistrial in the DOJ’s Broiler Chicken Price Fixing Case
By Craig Seebald and Laura Muse
It is no secret that the current administration has made antitrust regulation and enforcement a key part of its agenda, and consumer goods, including meat-processing, are a top priority of concern, especially as prices are going up. While the Biden administration has acknowledged that higher meat prices at the grocery store and related supply chain issues do have pandemic-related causes, it has also called out “another culprit” — “dominant corporations in uncompetitive markets taking advantage of their market power to raise prices while increasing their own profit margins.”1 “Big Chicken,” as the Washington Post and others refer to major U.S. poultry processors, such as Perdue Farms, is feeling the heat from increased antitrust scrutiny.2
The U.S. Department of Justice (“DOJ”) Antitrust Division, with assistance from the U.S. Department of Commerce Inspector General’s Office, the Federal Bureau of Investigation, and the U.S. Department of Agriculture (“USDA”) Inspector General’s Office, is leading an ongoing federal investigation into price fixing, bid rigging, and other anticompetitive conduct in the broiler chicken industry.3 The alleged illegal conduct began as early as 2012 and lasted at least until 2019.4 So far, in addition to a guilty plea from one company, the investigation has led to indictments against fourteen individuals and two other companies.
While the investigation predates the pandemic and the change of administration last January,5 the Biden administration includes the ongoing investigation in its list of action steps taken to further antitrust policing of the meat-processing industry. In a September 2021 blog post, for example, National Economic Council Director Brian Deese referenced the ongoing investigation, noting the Biden-Harris administration and USDA were “[t]aking strong actions to crack down on illegal price fixing, enforce antitrust laws, and bring more transparency to the meat-processing industry.”
Broiler Price Fixing Case
In June of 2019, the DOJ intervened in an Illinois federal court to stay discovery in a class action case.6 The original class action complaint alleged a broiler chicken industry price-fixing scheme spanning from 2008 to 2016.7 A year later, the DOJ announced the indictment of four current and former senior executives from two major broiler chicken producers, Pilgrim’s Pride Corp. and Claxton Poultry Farms, for conspiring to fix prices and rig bids for broiler chickens.8 A few months later, in an October 2020 press release, the DOJ announced a superseding indictment charging six additional individuals for their roles in the same conspiracy with ties to Pilgrim’s Pride Corp., Perdue Farms, and Koch Foods, Inc., among others.9
The case against the ten individuals went to trial in October of 2021.10 After seven weeks of trial followed by nearly four days of deliberations, the jury was unable to reach a verdict.11 The jury notes reveal the jury could not reach consensus on whether there was an overarching conspiracy and was unable to reach unanimity on a single defendant, even after “scouring the evidence.”12 The docket indicates the court declared a mistrial on December 16, 2021 and later set a new jury trial for February 22, 2022.13
The Mistrial—A Serious Setback?
The mistrial was undoubtedly a setback, as one Bloomberg article characterized it, for the agency and for the Biden administration’s antitrust agenda in the meat-packing space in general. However, as referenced in the same article and as noted above, the DOJ has had success with at least one of the major poultry processors it brought charges against: Pilgrim’s Pride Corp. pleaded guilty to price fixing in February of 2021 and was sentenced to a $107 million criminal fine. In addition, the DOJ has since announced other cases in the pipeline, including an indictment against Claxton Poultry Farms and Koch Foods, Inc., as well as an indictment against four additional former Pilgrim’s Pride Corp. executives. Trials are set for October 31, 2022 and July 18, 2022, respectively.14
Meanwhile, with respect to the private litigation the DOJ had intervened in back in 2019, a group of plaintiffs were just last month awarded court approval for a $181 million class action settlement agreement reached with several defendants, including Pilgrim’s Pride Corp.15
Altogether, this suggests that the DOJ, seemingly undaunted by the mistrial, and perhaps emboldened by the recent settlement in the private litigation case, likely plans to continue moving forward with its antitrust enforcement agenda in the poultry processing space. Nevertheless, the mistrial does highlight the difficulty of proving an antitrust conspiracy beyond a reasonable doubt in a high profile, multi-party case. The burden is high for the DOJ and the stakes are equally as high for defendants defending their conduct.
1 Brian Deese et al., Recent Data Show Dominant Meat Processing Companies Are Taking Advantage of Market Power to Raise Prices and Grow Profit Margins, The White House (Dec. 10, 2021), https://www.whitehouse.gov/briefing-room/blog/2021/12/10/recent-data-show-dominant-meat-processing-companies-are-taking-advantage-of-market-power-to-raise-prices-and-grow-profit-margins/.
2 See Laura Reiley, As Meat Prices Continue to Rise, Biden Administration Takes Aim at Big Chicken, Wash. Post (Oct. 4, 2021), https://www.washingtonpost.com/business/2021/10/04/poultry-companies-antitrust-crackdown/.
3 Press Release, U.S. Dep’t of Justice, Four Executives and Company Charged with Price fixing in Ongoing Investigation into Broiler Chicken Industry (Jul. 29, 2021), https://www.justice.gov/opa/pr/four-executives-and-company-charged-price-fixing-ongoing-investigation-broiler-chicken.
5 See David Yaffe-Bellany, Why Chicken Producers Are Under Investigation for Price Fixing, N.Y. Times (June 25, 2019), https://www.nytimes.com/2019/06/25/business/chicken-price-fixing.html.
6 See United States’ Mot. Intervene and Stay Discovery, In re Broiler Chicken Antitrust Litigation, No. 1:16-cv-08637 (N.D. Ill. June 21, 2019), ECF No. 2268.
7 See Class Action Compl., In re Broiler Chicken Antitrust Litigation, No. 1:16-cv-08637 (N.D. Ill. Sept. 2, 2016), ECF No. 1.
8 See Bob Van Voris, Chicken Price-Fixing Case Ends in Mistrial After Seven Weeks (Dec. 16, 2021), https://www.bloomberg.com/news/articles/2021-12-17/chicken-price-fixing-case-ends-in-mistrial-as-jurors-deadlocked (last updated Dec. 17, 2021).
9 See id.
12 Jury Notes 4, 8, United States v. Penn et al., No. 1:20-cr-00152-PAB (D. Colo. Dec. 16, 2021), ECF No. 923.
13 See Courtroom Mins., United States v. Penn et al., No. 1:20-cr-00152-PAB (D. Colo. Dec. 16, 2021), ECF No. 920; Order Re-Setting Trial Dates and Deadlines, United States v. Penn et al., No. 1:20-cr-00152-PAB (D. Colo. Dec. 22, 2021), ECF. No. 925.
14 See Order Granting Unopposed Joint Mot. Additional Ends of Justice Exclusion of 270 Days from Speedy Trial Calendar Pursuant to 18 U.S.C. §§ 3161(h)(7)(A)-(B) (i), (ii), and (iv), United States v. Norman W. Fries, Inc. et al., No. 1:21-cr-00168-RM (D. Col. Oct. 20, 2021), ECF No. 57; Order Granting Mot. Continue, United States v. McGuire et al., 1:21-cr-00246-DDD (D. Col. Oct. 6, 2021), ECF No. 71.
15 See Order Granting End-User Consumer Pls.’ Mot. Final Approval Class Action Settlements, In re Broiler Chicken Antitrust Litigation, No. 1:16-cv-08637 (N.D. Ill. Dec. 20, 2021), ECF No. 5304.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.