Food distributors sue Tyson Foods and others for collusion

By Daniel Uria

Jan. 31 (UPI) -- Two of the largest food distributors in the United States have sued several top poultry suppliers, alleging they conspired to manipulate prices.

Sysco and US Foods each filed separate lawsuits in the northern district of Illinois claiming Tyson Foods, Pilgrim's Pride, Sanderson Farms and other chicken companies illegally agreed to reduce chicken supply to inflate prices, according to Bloomberg.


Pilgrim's Pride spokesman Cameron Bruett said the company believes the case is "completely without merit" and representatives from Sanderson Farms and Tyson said the companies were prepared to vigorously defend against the claims.

Sysco and US Foods state they purchased chicken directly from Tyson, Pilgrim's, Sanderson and others for eight years beginning in 2008 and overpaid for poultry due to their collusion, the Wall Street Journal reported.

The two companies, which represent about 25 percent of the domestic food-distribution business, are seeking monetary damages.

The suits allege the chicken companies were able to gather important details about competitors' supplies from the anonymously rendered industry information service Agri Stats Inc. to adjust their own flocks of breeding birds accordingly.

The distributors also noted the benchmark Georgia Dock index reported a value for whole chickens at $1.11 per pound in 2016, 32 percent higher than the 84.55 cents a pound reported by USDA-managed benchmarks.


Both distributors said they relied on the Georgia Dock index, which is maintained by the Georgia Department of Agriculture and based on price information supplied by chicken companies, to price chicken.

The poultry industry is also subject to complaints by restaurants, regional grocery store chains and consumers as well as a probe by Florida Attorney General Pam Bondi regarding similar allegations.

Shares of Tyson fell 3.5 percent on Wednesday, as Pilgrim's shares fell 6.3 percent and Sanderson's dropped 4.1 percent.

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