Pilgrim's Pride Fined $107.9 Million

Pilgrim's Pride Pleads Guilty to Part in Broiler Pricing Conspiracy

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Pilgrim's Pride Corp. pleaded guilty on Tuesday to its role in a conspiracy to fix broiler chicken prices starting in 2012. (Photo courtesy of MSU Ag Communications)

OMAHA (DTN) -- Pilgrim's Pride Corp. admitted to its role in a conspiracy to fix broiler chicken prices starting in 2012 and will pay a $107.9 million fine as part of a plea agreement entered in federal court on Tuesday.

According to the plea agreement entered in the U.S. District Court for the District of Colorado in Denver, from as early as 2012 and continuing at least on into 2017, Pilgrim's Pride participated in a conspiracy to suppress and eliminate competition for sales of broiler chicken products in the United States that affected at least $361 million in the company's sales of broiler chicken products.

The U.S. Department of Justice said in a news release on Tuesday the investigation remains active.

Steven M. D'Antuono, assistant director in charge of the Federal Bureau of Investigation Washington field office, said in a statement the FBI will continue to work the case.

"These criminal acts cheat American workers and consumers while harming competitive markets," he said. "This ongoing investigation has yielded charges against 10 individuals for their efforts to illegally manipulate broiler chicken prices, and the FBI is committed to continuing this important work alongside the department of justice and our partners."

Back in January, Pilgrim's Pride reached a $75 million settlement with a number of plaintiffs in an ongoing antitrust class-action lawsuit filed in 2016, https://www.dtnpf.com/….

That lawsuit, filed by Maplevale Farms Inc. in 2016, alleged a number of large chicken-producing companies, including Pilgrim's Pride, Tyson Foods Inc., Koch Foods Inc. and others, beginning at least as early as January 2008, "conspired and combined to fix, raise, maintain, and stabilize the price of broilers."

The proposed settlement addresses the Maplevale Farms case. However, Pilgrim's Pride and other companies have been sued by several other companies, including Boston Market Corp.

The lawsuits were filed in the U.S. District Court for the Northern District of Illinois in Rockford. The Maplevale Farms lawsuit alleged chicken companies cut production in order drive up broiler prices.

Chicken company executives were charged with conspiring to fix prices and rig bids for broiler chickens. Broiler chickens are chickens raised for human consumption and sold to grocers and restaurants.

Back in June 2020, a grand jury indicted Jayson Penn, president and CEO of Pilgrim's Pride, along with Roger Austin, a former vice president of Fresh Foodservice at Pilgrim's Pride Inc. Also indicted were executives for Claxton Poultry Farms in Georgia, including Mikell Fries, president of Claxton Poultry Farms and grandson of the company's founder, along with Scott Brady, vice president of national accounts for Claxton Poultry Farms.

The indictment alleged the price fixing goes back to at least 2012 and points to repeated text communications among Austin, Brady and Fries over bids and prices for poultry contracts or overall market prices. The texts also repeatedly reference communications back to Penn. Those communications for bids on prices continued repeatedly until at least 2017.

The indictment also cited conversations over how to treat competitors who are short on product for delivery and competitors selling chicken products for lower margins. Penn noted in a series of emails regarding one unnamed competitor, "So in essence they are cheap and to add insult to injury are short product."

The indictment stated the business practices of the four executives "substantially affected interstate trade and commerce."

The DOJ filed the indictment with an antitrust class-action civil case in federal court in Illinois that was initially filed in 2016.

About 50% to 70% of broilers are sold under contract with a customer, about 10% to 20% are sold on the spot market, and roughly 17% to 20% are exported, according to the U.S. Poultry and Egg Association

A violation of the Sherman Act carries a maximum penalty of a $100 million fine for corporations.

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley