A LEGAL EXPERT EXAMINES POULTRY PRICE FIXING RE-TRIAL: FAILS TO FRY CHICKEN EXECS
Apr. 5, 2022
By Aron Solomon, JD
Last week, a Colorado jury was unable, for a second time, to reach a verdict in the trial of ten chicken industry executives charged with price fixing.
This second mistrial was preceded, in December, by the first mistrial of executives from several of the nation's largest chicken manufacturers. The Department of Justice had sought convictions against executives of these massive chicken producers, alleging that they together conspired to fix the prices of chicken, a $95 billion annual business in the United States.
In what was a major setback against the DOJ, the jury simply couldn't reach a verdict against these executives. As addressing anticompetitive practices is a stated priority of the Biden administration, the executives were retried in a Colorado court and once again a mistrial was the end result.
Last summer, the new administration passed a broad executive order taking aim at anticompetitive practices. That order was aimed at a far broader audience than simply food producers as it empowered many federal agencies to implement over seventy initiatives to promote competition in verticals ranging from food to technology to prescription drugs. The order was so broad that it even took aim at dramatically limiting non-competition agreements for workers.
Failing to get this high-profile suit to the finish line has been metaphorical egg on the administration's face, so while they had hoped for a significantly better result this month and even relied upon more testimony from insiders as part of the foundation of this retrial, the DOJ now faces some very hard choices. The head of the DOJ's Antitrust Division will need to personally appear in front of a federal judge this week to argue why there should be an almost unprecedented third trial in this case.
There have previously been two different sets of trials against what is known as the chicken cartel - civil and criminal. One of the civil suits, a massive class action, ended last year with a settlement of close to $200 million. It was also newsworthy as it resulted in a fee exceeding $50 million for the lawyers representing the class. Cited for their truly exemplary work in representing the class of people affected by the widespread chicken price fixing - in this lawsuit it was direct purchasers of chicken.
In two other suits, in 2020 and early 2021, Pilgrim's Pride and Tyson both settled with the feds over the price-fixing charges for - total of $332 million.
Josh Geist, a Pittsburgh lawyer, explains why these suits are so important and why the DOJ so ardently pursued this win:
"Anticompetitive behavior hurts all of us. Price fixing chicken affects everything from the prices you pay for fast food, to what you pay for chicken in the grocery store. By keeping an important food source for so many people at an artificially high price, consumers were being hurt for a long time."
This is precisely why you should give a cluck about this second mistrial. Price fixing in the food industry is not uncommon. Three years ago, a report in the Pacific Standard outlined that while price fixing in the chicken industry has been widespread, it is far from the only food production vertical affected. Pork, mushroom, potato, dairy, tuna, and egg producers have also been involved in price fixing in recent years.
As to the how of price fixing, the Pacific Standard report revealed that these food cartels have used subscription data services such as Agri Stats to exchange exactly the kinds of information cartels need to exchange to fix prices, including sales volume, demand, production capacity, and the like.
For this criminal retrial, the DOJ had hoped that the addition of more insider witnesses would have made the difference. Further, Law360 reported that some of the jurors for the retrial had expertise in price setting in the grocery context. So, for these chicken industry executives, this may have actually been an example of the elusive concept of an actual jury of one's peers.
And for anyone who thinks this all begins and ends with chicken, it also impacts your delicious tuna sandwich. We learned in March that executives from Bumble Bee, a tuna giant, are being hailed back to court for this own industry's price-fixing conspiracy, dating back to 2010.
It was critically important for the DOJ to get a conviction in the ongoing chicken litigation to further solidify the message to these producers from the civil suits - that the costs and penalties for price fixing in the food industry aren't just foul, they simply don't make economic sense. Now, faced with the reality that the judge will not allow another retrial, the DOJ might just slowly back away and pursue their competition agenda in a different court with different defendants.
About Aron Solomon
Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital and the Editor of Today's Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in CBS News, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications.