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Federal court consolidates cattle antitrust cases

R-CALF USA filed first antitrust complaint in April, with others subsequently filing similar suits.

On July 10, the Federal District Court for the District of Minnesota ordered the consolidation of various class action claims against Tyson Foods, JBS, Cargill and National Beef ("the Big 4") that have been filed on behalf of cattle producers and Chicago Mercantile Exchange (CME) users. R-CALF USA filed the first complaint in April, with others subsequently filing similar suits.

The R-CALF USA suit alleged that the nation's four largest beef packers violated U.S. antitrust laws, the Packers & Stockyards Act and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers from at least Jan. 1, 2015, through when the suit was filed.

The complaint, which is supported by witness accounts, including a former employee of one of the Big 4, as well as trade records and economic evidence, alleged that the Big 4 conspired to artificially depress fed cattle prices through various means, including:

  • Collectively reducing their slaughter volumes and purchases of cattle sold on the cash market in order to create a glut of slaughter-weight fed cattle;
  • Manipulating the cash cattle trade to reduce price competition among themselves, including by enforcing an antiquated queuing convention through threats of boycott and agreeing to conduct substantially all of their weekly cash market purchases during a narrow, 30-minute window on Fridays;
  • Transporting cattle over uneconomically long distances, including from Canada and Mexico, in order to depress U.S. fed cattle prices, and
  • Deliberating closing slaughter plants to ensure the underutilization of available U.S. beef packing capacity.

These alleged practices are estimated to have depressed fed cattle prices by an average of 7.9% since January 2015, thus causing significant harm to U.S. ranchers.

By the Minnesota court’s order, the R-CALF USA action was designated as the lead case file. The court also appointed R-CALF USA’s counsel, Scott+Scott Attorneys at Law LLP, along with Cafferty Clobes Meriwether & Sprengel LLP, as interim lead counsel for the proposed classes of fed cattle producers and CME live cattle contract users. The consolidated case will be captioned “In Re Cattle Antitrust Litigation.”

R-CALF USA and the other plaintiffs filed a consolidated amended complaint July 15, which supersedes the prior complaints filed in the consolidated actions.

The court is expected to shortly set the deadline for the defendants to either file an answer to the consolidated complaint or move to dismiss the claim.

When the initial R-CALF USA lawsuit was filed, Tyson Foods expressed to Feedstuffs disappointment in the “baseless case.”

“As with similar lawsuits concerning chicken and pork, there’s simply no merit to the allegations that Tyson colluded with competitors,” the company said. “This complaint is nothing more than another transparent and opportunistic attempt by attorneys to make money for themselves at the expense of consumers.”

Tyson continued, “Tyson operates with integrity every day. We welcome competition, which makes us a better company, enhances the quality of our products and provides more choices at greater value to our customers.”

TAGS: Business
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