Fast-food dining chain McDonald's is suing Cargill, JBS, National Beef and Tyson Foods, alleging the four beef processors are conspiring to fix beef prices.
In a lawsuit filed Friday in the U.S. District Court for the Eastern District of New York, McDonald's accuses the four processors of violating federal antitrust laws by coordinating on prices paid for fed cattle and on slaughter volumes since 2015 through "secret" meetings and telephone calls.
The lawsuit alleges the four companies sought to raise and maintain the price of beef at prices artificially higher than they would be otherwise.
"Rather than trying to improve profitability through independent conduct pursuant to unilateral business interests, defendants instead agreed to collectively reduce and manage their respective slaughter volumes, which, in turn, resulted in a reduction in the supply of beef," McDonald's lawyers wrote in the complaint. "The artificial beef shortages ushered in a new era of supra-competitive prices paid by plaintiff, through its assignors, and other direct purchasers of beef."
Cargill, JBS, National Beef and Tyson Foods did not respond to Agri-Pulse's requests for comment.
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The beef sector has been under scrutiny by federal and state antitrust officials in recent years. Documents obtained by Agri-Pulse in 2022 confirmed the Justice Department and several state attorneys general were conducting an investigation into the four packers over price-fixing claims.
Eleven attorneys general and 19 members of Congress sent letters to DOJ in 2020 urging it to look into potential price-fixing in the beef industry after they noticed disparities between the price of live weight cattle and the retail cost of boxed beef sold to consumers.
The companies' top executives have blamed the price disparities between packers and producers on high beef demand, labor shortages and inflation. During a House Ag Committee hearing in 2022, all four CEOs denied colluding to fix prices.
When directly asked by Rep. David Scott, D-Ga., whether they had conspired with other meatpacking companies to fix prices, Cargill CEO David MacLennan, National Beef CEO Tim Klein and Tyson Foods CEO Donnie King each answered with a firm “No.” Tim Schellpeper, the CEO of JBS Foods, said, “Not that I am aware of.”
The McDonald's lawsuit alleges that the four packers slaughtered "significantly fewer cattle in 2015" than they did on average for the eight years prior. While they "slowly raised their slaughter levels as the availability of fed cattle increased between 2016 and 2019,"none of the operators have returned to their pre-2015 levels despite record profitability."
The lawsuit also cites testimony by an unnamed worker at a Texas plant operated by JBS subsidiary Swift & Company, who claimed the plant's head of fabrication "specifically admitted that the defendants had an 'agreement' to reduce their purchase and slaughter volumes in response to what they perceived to be high cattle prices.'"
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