New Indictments in Broiler Conspiracy

Koch Foods, Pilgrim's Pride Executives Face Charges in Broiler Price Fixing

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Koch Foods Inc. and four former executives of Pilgrim's Pride Corp. were indicted by a grand jury in Denver. (Photo by (cc-by-sa-2.0))

LINCOLN, Neb. (DTN) -- Koch Foods Inc. and four Pilgrim's Pride Corp. executives were charged for their role in an alleged nationwide broiler chicken price-fixing conspiracy, according to an indictment handed down by a grand jury in Denver on Wednesday. The indictment is the latest action in an ongoing investigation by the U.S. Department of Justice.

In addition to the Park Ridge, Illinois-based Koch Foods, the new indictment that supersedes a previous indictment also charges Pilgrim's Pride executives Jason McGuire, a former executive vice president of sales for prepared foods; Timothy Stiller, a former general manager of fresh food services and small bird de-bone; Wesley "Scott" Tucker, a national accounts sales executive; and Justin Gay, director of fresh food service sales.

In February, Pilgrim's Pride 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, https://www.dtnpf.com/….

The new indictment alleges the defendants conspired to suppress and eliminate competition for sales of broiler chicken products, which are chickens raised for human consumption and sold to grocers and restaurants.

Koch's Senior Vice President William Kantola is among 10 people indicted in October 2020 for their roles in the alleged conspiracy. On May 19, a grand jury returned an indictment against Claxton Poultry for its role in the same alleged conspiracy.

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Koch Foods, McGuire, Stiller, Tucker and Gay have been charged with a violation of the Sherman Antitrust Act, according to the indictment. The four Pilgrim's Pride executives are scheduled to make their initial court appearances on Aug. 11 in the U.S. District Court for the District of Colorado.

Violations of the Sherman Act carry a maximum penalty of 10 years in prison and a $1 million fine for individuals, $100 million fine for corporations.

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.

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

Follow him on Twitter @DTNeeley

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Todd Neeley

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