U.S. Food Distributors Allege Tyson Foods, Rivals Fixed Chicken Prices

Tyson Foods brand frozen chicken wings are pictured in a grocery store freezer in the Manhattan borough of New York City, U.S. May 11, 2017.
( REUTERS/Carlo Allegri )

Top U.S. food distributors Sysco Corp and U.S. Foods Inc have sued the country’s biggest chicken processors for allegedly conspiring to inflate prices.

The distributors sued companies including Tyson Foods Inc, Pilgrim’s Pride Corp, Sanderson Farms and Perdue Farms in separate complaints filed in federal court on Tuesday.

The U.S. chicken sector, which is dominated by these large meat companies, has come under increased scrutiny in recent years as customers and farmers have alleged antitrust violations relating to pricing, production and compensation.

Tyson, the biggest U.S. chicken company, and Pilgrim’s Pride denied the latest accusations. Sanderson Farms said it will defend itself against the claims, while privately held Perdue declined to comment.

Tyson shares were down 3.9 percent in early afternoon trading, and Sanderson Farms shares lost 3.3 percent. Shares of Pilgrim’s Pride, mostly owned by Brazilian meat packer JBS SA, were down 5 percent.

U.S. poultry buyers previously claimed in a 2016 lawsuit that Tyson and its competitors had colluded since 2008 to reduce output and manipulate prices.

“Follow-on complaints like these are common in antitrust litigation,” Tyson spokesman Gary Mickelson said about the lawsuits by Sysco and U.S. Foods. “Such complaints do not change our position that the claims are unfounded.”

U.S. chicken processors last year were earning some of the highest profit margins in more than a decade as prices for corn and soy used to feed birds slumped due to a global grain glut.

The cases are Sysco Corporation v Tyson Foods Inc et al, U.S. District Court, Northern District of Illinois, No. 18-cv-00700 and US Foods Inc v Tyson Foods Inc et al, U.S. District Court, Northern District of Illinois, No. 18-cv-00702.

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