Fast food giant McDonald’s is taking a law suit in the United States where it is suing four major meat processing companies claiming that they ‘conspired to limit supply’ in order to boost their own profits.
Reuters has reported that McDonald’s filed the case in New York in recent days against Cargill, JBS S.A, JBS USA, , Swift Beef Company, JBS Packerland Inc., National Befe Packing Company, Tyson Foods Inc. and Tyson Fresh Meats Inc.
In the legal paperwork, McDonald’s alleges that the companies listed and their co-conspirators “engaged in a contract, combination or conspiracy in restraint of trade or commerce in violation of Section One of the Sherman Act”.
The fast food franchise company added that “the goal of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold” to McDonald’s and others at supra-competitive levels – that is, prices artificially higher than beef prices would have been in the absence of their conspiracy”.
McDonald’s alleges price-fixing
McDonald’s claims in the legal documents that the meat processing companies managed to be successful in ‘price-fixing’ by undertaking certain methods.
The company claimed the processors and packers “implemented their conspiracy by coordinating, manipulating, or agreeing to pay less than competitive prices for the main or primary input in producing beef, namely, slaughter-ready cattle”.
Documents regarding the complaint described “beef” as including boxed and case-ready meat processed by companies such as Cargill, JBS and Tyson and other smaller producers from fed cattle, including primal cuts, trim or sub-primal products, further-processed and value-added products, offal or variety products, and rendered products and by-products.
“Beef” is also described in the lawsuit as including ground beef to the extent that it is processed, in whole or in part, from fed cattle. “Fed cattle” means steers and heifers raised in feedlots on concentrated diets to be produced and sold as beef, according to the court documents.
The legal claim states: “Additionally, or in the alternative, as a further example, defendants [the meat processors listed] and their co-conspirators implemented their conspiracy by collusively reducing the slaughter-ready cattle and beef supply, which over time artificially elevated the price of beef that they sold to Plaintiff and others”.
The meat processing companies listed in the case are the world’s largest meat processing and packing companies, known in the industry as meatpackers or packers.
In 2018, Tyson Fresh, CMS, Swift/Packerland, and National Beef sold approximately 80% of the more than 25 million pounds of fresh and frozen beef supplied to the U.S. market, according to McDonald’s.
“Collectively, they controlled approximately 81–85% of the domestic market-ready fed cattle processed (or slaughtered) during the Conspiracy Period. The next largest… meatpacker had only a 2–3% market share,” the court documents also state.
McDonald’s has demanded a jury trial to be undertaken into the case.
