Foreign-owned food price fixing

By Leisa Boley-Hellwarth

Congress is preoccupied with perceived safety concerns regarding a Chinese-owned ap, TikTok. The general public was transfixed with the alleged Chinese spy balloons that floated across the country. On the other hand, I think we should spend more time considering what is happening in Minneapolis at the U.S. District Court in the District of Minnesota. In re Pork Antitrust Litigation, No. 18-01776, is the case to review. The class action complaint was filed on Jan. 15, 2020, under antitrust laws of the United States, and includes the following Defendants: Clemens, Hormel, Indiana Packers, JBS (settled all claims but denied any liability), Seaboard, Smithfield, Triumph, Tyson, and Agri Stats (data service that monitors pricing and production).

The pork integrator defendants represent $20 billion in annual commerce. The complaint asserts that in the U.S. pork industry, a small number of large companies control supply. The defendants in the lawsuit collectively control over 80% of the pork integrated market. The plaintiffs argue that from 2009 to 2022, defendants entered into a conspiracy to fix, raise, maintain and stabilize the price of pork. The principle (but not exclusive) method by which defendants implemented and executed their conspiracy was by coordinating output and limiting production of the intent and expected result of increasing pork prices in the United States. In furtherance of their conspiracy, plaintiffs exchanged detailed, competitively sensitive and closely guarded non-public information about prices, capacity, sales volume and demand through their co-conspirator, Agri Stats.            

On Sept. 27, 2022, Smithfield requested preliminary approval of a $75 million settlement with consumers in the case. Previously, Smithfield settled with the “direct” purchaser plaintiffs for $83 million and with commercial purchaser plaintiffs (includes restaurants) for $42 million. Their settlement stipulates that Smithfield is admitting no fault and denying any liability. Smithfield will, however, provide the Plaintiffs with information to assist in their litigation of the claims against the other Defendants.

Consumers have until June 20,2023 to file a claim, which can be found at overchargedforpork.com or by calling 866-797-0864.

Who is Smithfield Foods? Founded in 1936, in Smithfield, Virginia as the Smithfield Packing Company by Joseph W. Luter and his son, Smithfield Foods is now the largest pork producer in the world. In 2013, Smithfield was purchased by the Chinese conglomerate, WH Group for $4.72 billion. The acquisition included 146,000 acres of American land. It was the largest Chinese acquisition of an American company to date.

Hats off to the tort lawyers who brought this claim. A tort is a wrongful act or an infringement of a right leading to civil legal liability. Lawyers, especially tort lawyers, endure endless complaints about their presence in the legal system. They are considered the greedy ones who caused McDonald’s to pay a woman millions because her coffee was too hot. They endure countless stories of ambulance chasing. Tort reform came about because of the general disdain for the work of tort lawyers. Tort reform refers to changes in the civil justice system that aim to reduce the ability of plaintiffs to bring tort litigation and reduce the amount of damages that are awarded.  

Instead of criticizing tort lawyers, perhaps we should appreciate their willingness to zealously represent clients. Their research led to discovery of an alleged price fixing conspiracy in the United States food chain.

While most of the defendants are American companies, it is unsettling that the largest defendant is Chinese-owned. And is proposing settlement amounts of $83 million, $42 million and $75 million, while denying any liability. That is serious money. 

The integrity of the food chain means that consumers should be able to purchase food free from

 inflated prices due to price fixing conspiracies. And presence of a foreign government in that alleged price fixing scheme should be examined in depth with precautions to prevent further problems. Maybe it is easier to concentrate on apps and balloons, but the U.S. food chain needs to remain free of manipulation by domestic and international companies.

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