New York.- McDonald’s sued major beef suppliers, including Tyson, for setting prices at artificially high levels in a conspiracy that violated federal antitrust laws, The New York Post revealed.
In a lawsuit filed in the Eastern District of New York, United States, the burger and fries giant claimed that meat suppliers agreed to manipulate and fix prices at “super-competitive levels.”
The nine food suppliers, including Tyson Foods, JBS and Cargill, have been conspiring since 2015 to fix beef prices, the lawsuit claims. Collectively, the defendants dominate the beef market. In 2018, they sold about 80 percent of the more than 25 million pounds of beef sold in the U.S. market.
Their years-long conspiracy restrained trade, making it a violation of the Sherman Antitrust Act, according to the lawsuit cited by the Post.
“Defendants and their co-conspirators implemented their conspiracy by collusively reducing the supply of slaughter-ready cattle and beef, which over time artificially raised the price of the beef they sold to plaintiff and others,” McDonald’s said. in the demand. The fast food chain is seeking damages three times greater than those it suffered as a result of the artificially inflated prices, reasonable attorneys’ fees, and pre- and post-judgment interest. McDonald’s is also seeking to have the court prohibit suppliers from participating in a price-fixing scheme again. Tyson Foods, JBS and Cargill did not immediately respond to requests for comment. In 2015, suppliers began restricting their slaughter volumes, thereby decreasing their meat production and increasing prices, after being hit by increasingly tight profit margins, the lawsuit claims. Some of the suppliers even closed plants during the conspiracy to further restrict their meat supply, McDonald’s alleged. In 2020, the US Department of Justice subpoenaed some of the suppliers and launched an investigation into their pricing practices. A confidential witness in the Justice Department investigation revealed the existence of a conspiracy among the suppliers. Suppliers “achieved unprecedented meat margins” thanks to their plan, according to the lawsuit. In 2021, Tyson Foods reported an operating margin of 18 percent in its beef business, nearly nine times its operating margin in 2014. JBS USA reported net income of $27.2 billion at the same time, representing an increase 25.8 percent from its 2014 revenue. The suppliers covered up their plot by wrongly attributing their record profits to “their ability to accurately forecast the volume of cattle that would enter the meat supply chain in the coming years,” cites the lawsuit.
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