Price Fixing Alleged in Egg Industry

     PHILADELPHIA (CN) – The country’s largest egg trade group oversaw a conspiracy of price fixing planned by the group’s research economist to constrict the supply of eggs, a supermarket chain claims in a federal antitrust complaint.
     The redacted complaint, filed by Indianapolis-based Marsh Supermarkets, claims United Egg Producers and its member companies colluded in a number of supply-reducing practices, including reducing the number of laying hens, prematurely molting the hens to restrict their output and delay the hatching of new chicks.
     UEP’s plan was devised by research economist (nonparty) Don Bell, who in 1994 created the plan for egg producers to restrict supply, the complaint states. Four years later, UEP expanded its membership structure to allow independent egg producers, in addition to the organization’s traditional large corporate members, to join the group, to ensure that smaller farms didn’t increase egg supply and thus reduce prices.
     In 1999, according to the complaint, UEP members explicitly agreed on a three-pronged plan to restrict supply: an immediate 5 percent molt of the flock, a 5 percent reduction in flock inventory, and a program to limit the number of new hens hatched.
     “When egg companies attempted to leave the [cartel], UEP contacted customers of those producers in order to convince them to buy only” those eggs approved in the plan, the complaint says.
     For example, the complaint states, egg producer Sparboe attempted to leave the program and UEP “contacted Sparboe’s customer, Wal-Mart, in an attempt to discourage the company from purchasing eggs from Sparboe.”
     The plan expanded and increased through the 2000s, with UEP instituting a plan to increase exports to foreign markets to further reduce the price of eggs in the United States, the lawsuit claims.
     Marsh Supermarkets seeks an injunction and damages for violations of the Sherman Antitrust Act. It is represented by Moira Cain-Mannix with Marcus & Shapira, of Pittsburgh.
     The United States produces about 75 billion eggs a year, about 10 percent of the world’s supply. About 60 percent of them are eaten as eggs, 9 percent are sold as eggs in restaurants, and the rest are used in prepared foods, according to industry publications. A laying hen can produce 250 to 300 eggs a year.

%d bloggers like this: