Customers complain about rising hamburger prices and McDonald’s complains about rising meat prices. The restaurant company has taken legal action against the giants of the American meat industry, accusing them of artificially inflating the prices of beef, the ingredient in its hamburgers, through agreements to restrict competition, according to a 100-page lawsuit filed with a New York court.
The lawsuit is directed against JBS, Tyson, Cargill and National Beef and several of their subsidiaries, the country’s meat giants. In its lawsuit, McDonald’s is asking for a jury trial to award unquantified damages and for a court to order an end to the alleged price-fixing conspiracy.
“Beginning at an uncertain time, but at least since approximately January 1, 2015, and continuing to the present and with subsequent effect, the defendants and their co-conspirators engaged in a contract, combination or conspiracy to restrain trade in violation of Section One of the Sherman Act [que protege la competencia]”says the lawsuit, to which this newspaper has had access. “The objective of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold to plaintiff and others at supracompetitive levels, that is, prices artificially higher than what beef prices would have been. in the absence of their conspiracy. The defendants’ conspiracy was effective and achieved that objective,” he added.
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The alleged anti-competitive practices of which McDonald’s accuses its meat suppliers worked in both directions. It ensures that they coordinated to pay lower than competitive prices for the main input in beef production, cattle ready for slaughter, with the purpose and effect of keeping their margins and the price of beef above competitive levels. beef sold to McDonald’s and other customers.
Additionally, the defendants and their co-conspirators collusively reduced slaughter-ready livestock and beef supply, which over time also artificially inflated the price of beef, always in line with demand.
The four defendant groups have a dominant position in the sector. The lawsuit notes that in 2018, they supplied 80% of the more than 25 million pounds (about 11,300 tons) of fresh and frozen beef supplied to the U.S. market. In addition, they controlled approximately 81%-85% of the fed cattle ready for the domestic market processed (or slaughtered) during the period to which the lawsuit relates.
McDonald’s thus joins the investigations launched by the Department of Justice and the Department of Agriculture into whether large meat companies have collusively set beef prices in the United States.
In addition to the high concentration in the wholesale beef industry, the lawsuit points out other structural characteristics of the US market that have facilitated the defendants’ alleged agreements or collusive actions. For example, meat companies are at the top of the supply and distribution chain that ultimately delivers beef to the market. The defendant companies purchase cattle from the nation’s feedlots, slaughter and package the cattle for beef, and ultimately sell the beef to beef buyers such as McDonald’s.
The company says in its lawsuit that frequent meetings between its executives and key employees facilitated the collusion. “Trade association conferences and other industry events provided convenient opportunities to exchange information, plans and strategies, as well as build relationships,” he says. “The Defendants took advantage of these opportunities to promote their collusive supply restrictions,” it adds.
The beef producers have denied wrongdoing in related cases that have been consolidated in federal court in Minnesota. The plaintiffs include BJ’s Wholesale, Sodexo, Target and Aldi, Reuters reports. Beef producers also face lawsuits from American consumers, livestock producers and others seeking class action status and monetary damages in the Minnesota litigation.
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