Chicken Executives Indicted on Price-Fixing Charges

Grocery stores around the country, like this Kroger in Atlanta, are limiting meat purchases due to supply concerns amid the Covid-19 pandemic. (AP Photo/Jeff Amy)

DENVER (CN) — A federal grand jury has charged the CEO of Pilgrim’s Pride and five others with fixing prices of broiler chickens for five years.

The Tuesday indictments came as shoppers and restaurant chains are facing higher food prices attributed to the coronavirus pandemic, yet chicken farmers are complaining that they are being paid less by the dominant corporations.

“Particularly in times of global crisis, the division remains committed to prosecuting crimes intended to raise the prices Americans pay for food,” assistant attorney general Makan Delrahim with the Department of Justice’s antitrust division in a statement.

“Executives who cheat American consumers, restaurateurs and grocers and compromise the integrity of our food supply, will be held responsible for their actions.”

Federal prosecutors charged Jayson Penn, CEO of Greeley, Colorado-based Pilgrim’s Pride with 15 counts of illegal trade. Current and former executives Roger Austin, Mikell Fries and Scott Brady also face charges.

Three unnamed national restaurant franchises and two unnamed national grocery-store chains allegedly were among those who benefited from the illegal discounts.

From 2012 through 2017, the men illegally conspired to fix the price of broiler chicken products, according to the 20-page indictment. The scheme was devised “to rig bids and to fix, maintain, stabilize, and raise prices and other price-related terms for broiler chicken products sold in the United States,” the complaint states.

Price for chicken meat is typically based on the price for an “8-piece bone-in broiler chicken product,” which consists of pairs of breasts, wings, thighs and drumsticks. The cents per pound might vary for dark meat or chicken parts and are bid on annually.

The Pilgrim’s Pride plant in Cold Spring. Minn., was was photographed here on April 28. (Dave Schwarz/St. Cloud Times via AP)

Under this scheme in 2013, seven unnamed suppliers received dark meat at 30 cents below the price of the eight-piece price, while other buyers paid 2 cents more per pound, according to the indictment. It claims that Penn and his co-conspirators, “participated in a continuing network of suppliers and coconspirators, an understood purpose of which was to suppress and eliminate competition through rigging bids and fixing prices and price-related terms for broiler chicken products sold in the United States.”

In addition, Pilgrim’s Pride and other chicken processors faces more than three dozen antitrust complaints in Chicago Federal court dating back to 2016, alleging price fixing on chicken products ranging from whole broiler birds to chicken pot pies.

The most recent antitrust complaint, filed by Kraft Heinz Food in April, traces Pilgrim’s Pride’s alleged price-fixing back to 2009. According to that complaint: “Pilgrim’s Pride is liable for all conspiratorial acts undertaken while it was in bankruptcy proceedings during 2009, and reentered, and reaffirmed its commitment to, the conspiracy following its discharge from bankruptcy on December 29, 2009.”

U.S. District of Colorado Chief Judge Philip A. Brimmer, appointed by George W. Bush, will oversee the criminal case in Colorado. Pilgrim’s Pride says it sold $11.31 billion of products in 2019. While its CEO faces criminal charges, Pilgrim’s Pride is not named in the indictment and did not respond immediately to a request for comment.

If charged, each defendant faces up to 10 years in prison and a $1 million fine.  

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