LDN - Business

McDonald's sues top meat packers for allegedly colluding to inflate the price of beef

[October 09, 2024] By WYATTE GRANTHAM-PHILIPS

NEW YORK (AP) — McDonald’s has some beef with today’s largest meat packers.

The fast food giant is suing the U.S. meat industry's “Big Four” — Tyson, JBS, Cargill and National Beef Packing Company — and their subsidiaries, alleging a price fixing scheme for beef specifically. In a federal complaint, filed Friday in New York, McDonald's accused the companies of anticompetitive measures such as collectively limiting supply to boost prices and charge “illegally inflated” amounts.

This collusion caused the beef market to become “a monopoly in which direct purchasers were forced to buy at prices dictated by (the meat packers),” McDonald's suit reads — later noting that the injury it has sustained as one of those buyers is what “antitrust laws were designed to prevent.”

McDonald's alleges that the meat packers' conspiracy dates back nearly a decade, at least as early as January 2015, and continues today. Its suit argues these companies' actions violate the Sherman Act, a federal antitrust law.

Tyson, JBS, Cargill and National Beef did not immediately respond to requests for comment Tuesday. But these companies have faced federal probes and allegations of price fixing before.

Lawsuits filed by grocery stores, ranchers, restaurants and wholesalers have piled up over the years. Some litigation is still pending, although meat packers and processers have opened their wallets in the past.

In 2022, for example, JBS agreed to a $52.5 million settlement in a similar beef price-fixing lawsuit. And Tyson agreed to pay $221.5 million back in 2021, after facing class-action claims that alleged purposely inflated chicken prices.

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The sign outside a McDonald's restaurant is seen in Pittsburgh, June 25, 2019. (AP Photo/Gene J. Puskar, File)

Such settlements did not include admissions of wrongdoing, however. Meat processors have previously maintained that larger supply and demand factors out of their control, not anticompetitive behavior, has caused prices to go up. Meat processing plants were occassionally closed during the height of the COVID-19 pandemic, for example, and the industry has also faced labor shortages that were worsened by the pandemic.

Still, lawsuits like the one from McDonald's point to increased profit margins during the alleged time of conspiracy — and argue that overall concentration of the market helps facilitate collusion.

“Conspiracies are easier to organize and sustain when only a few firms control a large share of the market,” McDonald's suit reads. Data from recent years has showed that Tyson, JBS, Cargill and National Beef control more than 80% of the U.S. beef market combined, the suit notes.

McDonald's is seeking a trial by jury. The Chicago-based chain, which did not immediately respond to a request for further comment Tuesday, has more than 39,000 locations across over 100 countries worldwide, including about 13,000 in the U.S. The vast majority are franchised.

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