McDonald’s is suing Tyson Foods for allegedly choking the supply chain to raise prices
McDonald’s is suing Tyson Foods for allegedly choking the supply chain to raise prices
The lawsuit alleges that the meatpacking giants reduced production levels starting in 2015 to “artificially” drive up market prices
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Image: NurPhoto (Getty Images)
McDonald’s has filed a lawsuit against Tyson Foods (TSN-0.55%), JBS, and other major meat processing companies, accusing them of colluding for years to limit beef supplies.
The lawsuit alleges that the collusion allowed the companies to boost their profits while forcing McDonald’s to pay inflated prices for their meat.
McDonald’s claims the companies, including Cargill and National Beef Packing, systematically reduced production levels starting on January 1, 2015, in order to “artificially” drive up market prices. With significant control over the cattle and beef industry, the companies could manipulate prices at their will, the lawsuit says.
“Only colluding meatpackers would expect to benefit by reducing their prices and purchases of slaughtered cattle, fully aware that their conspiracy would shield them from the pressures of a competitive market,” McDonald’s stated.
The “Big Four” beef companies represent the largest meat processing and packing facilities globally. In 2018, they combined to account for about 80% of all fresh and frozen beef sold in the U.S., while the next largest competitor held less than 3% market share.
The lawsuit is part of a broader trend of allegations against the meatpacking giants regarding violations of U.S. antitrust laws and coordinated efforts to manipulate cattle pricing. In June 2020, it was reported that the Department of Justice (DOJ) Antitrust Division issued civil subpoenas to Tyson Foods, JBS, Cargill, and National Beef to gather information about their pricing practices, particularly looking at records dating back to January 2015.
Earlier this year, retail giants like Target (TGT-2.54%) and Kroger (KR+0.13%) highlighted similar concerns about rising profits and beef prices. In May, cattle ranchers also attempted to challenge the meatpacking giants but failed to provide sufficient evidence to prove they were directly harmed by the alleged anti-competitive behavior.
McDonald’s, one of largest companies in the world with 13,000 U.S. restaurants and 39,000 locations globally, is seeking unspecified monetary damages and a court order to end the alleged price-fixing scheme. The chain has requested a trial by jury.
Article: McDonald’s sues Tyson Foods for conspiring to limit beef supply (qz.com)