Class action lawsuit alleges price fixing in cattle trade, inflated consumer prices

SD Ag Connection - April 28, 2019

MINNEAPOLIS, MN - A federal class-action lawsuit has revealed that a nationwide cartel of leading meatpacking manufacturers in the $100 billion beef industry forced consumers to pay high prices for steak, hamburgers and other beef products, according to the law firm bringing the case, Hagens Berman.

According to the lawsuit filed April 26, 2019 in the U.S. District Court for the District of Minnesota, the price-fixing scheme has been carried out by the biggest names in the industry who control approximately 75 percent of the beef-packing market.

The defendants - Tyson, Cargill, National Beef and JBS - are responsible for purchasing beef from ranchers, processing the beef and selling it to retail businesses for purchase by consumers, and attorneys say they have been bilking consumers since 2015 by artificially limiting the amount of beef they purchase, process and sell to retail operations.

"Our complaint alleges that families nationwide have been overpaying for years for beef products they buy routinely, unknowingly paying inflated prices fixed by a scheme to limit beef supplies," said Steve Berman, managing partner of Hagens Berman and attorney representing consumers in the class-action lawsuit against the meatpacking defendants. The result: this $100 billion industry reaped billions of dollars in extra profits while consumers paid far more for beef than they should have. We intend to put an end to it."

The class action seeks to recover losses consumers faced under the price-fixing scheme, as well as injunctive relief from the court to put an end to the anticompetitive behavior. The case brings counts of violations of federal and state antitrust laws and unfair competition, unjust enrichment and consumer protection laws.

The lawsuit alleges that defendants "entered into a conspiracy to extract maximum profits from the distribution channel of beef - by both extracting all gains from the ranchers who raised the cattle, as well as artificially inflating the price of beef being sold to the consumer."

The suit goes on to say that defendants "engaged in a concerted scheme to suppress throughput of beef, artificially depressing both the amount of cattle they purchased and the amount of processed beef they sold to retail operations. The purpose of the scheme was to maximize the margins they received from sale of beef - by both underpaying the farmers, and simultaneously ensuring an overcharge to the consumer."

The defendants colluded on their purchases of cattle from ranchers by restricting the amount of cattle they purchased and bid rigging practices that depressed the price of cattle that the defendants purchased through auctions, attorneys claims. Defendants' actions created an artificial shortage of beef, which harmed consumers by elevating the price they paid for beef.

The lawsuit alleges that prior to the anti-competitive conduct, the price of cattle sold to the defendants and the price of beef sold by defendants moved in tandem. Following the anti-competitive conduct, the price of cattle fell while the price of beef remained elevated

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