DOJ investigates poultry companies over anticompetitive labor practices, WSJ reports

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Dive Brief:

  • The Justice Department is looking into whether poultry companies engaged in anticompetitive sharing about employment practices that kept wages lower for employees, The Wall Street Journal reported, citing people familiar with the matter.
  • The civil probe by the DOJ is investigating several poultry companies, the business publication noted. The Wall Street Journal said the probe is in the preliminary stage and it’s too soon to know if it will lead to action from the government. 
  • The review into employment practices is the latest in a string of investigations during the last few years at meat and poultry companies over issues including price fixing. Major CPGs, restaurants, retailers and distributors have sued, alleging anticompetitive pricing behavior.

Dive Insight:

While little is known about whether the DOJ investigation over labor practices will gain momentum, it marks the latest in a string of reviews into the business practices of the meat and poultry industry. 

Meat giants in the sector have been hit with accusations of conspiring to keep business — and profits — for themselves, with criminal prosecutioncivil antitrust lawsuits and federal probes into disparities between market prices and payment for smaller processors. Chicken and pork companies, including Tyson Foods, JBSSmithfield Foods and Pilgrim’s Pride, have been among those to pay money to settle price-fixing litigation.

In the latest probe, Pilgrim’s Pride said in a regulatory filing last month that it was notified on Feb. 9 that the DOJ opened a civil investigation into “human resources antitrust matters.” A spokesman for Perdue told The Wall Street Journal it received a similar notice. The business publication noted chicken-plant employees have said in lawsuits that their employers conspired to exchange compensation data to hold down employee wages for more than two decades.

These and other claims have attracted the interest of the White House. President Joe Biden said in January he would help to increase competition in meat processing and ultimately lower prices for consumers by providing $1 billion to assist independent producers.

It came four months after the Biden administration announced plans last September to crack down on alleged meat price fixing among large meat processors. Just four firms control approximately 55% to 85% of the market for beef, pork and poultry, according to the administration.

The U.S. economy as a whole has been hit hard by a strained labor market and the ongoing pandemic that has made it difficult to find enough workers. Few sectors have been impacted as much as meat and poultry processors. 

The industry was hit particularly hard during the early stages of the outbreak. Unions, activists, workers and family members criticized the meat industry for waiting too long to put additional safety measures in place. Some employees who contracted the virus and families of workers who died from the coronavirus filed lawsuits against Smithfield FoodsTyson and other companies for the conditions in plants.

More recently, meat and poultry makers said labor shortages have limited how much they can process, leading to product shortages and higher prices.

Another investigation into meat and poultry is likely to keep pressure on the industry from critics and create yet another obstacle to consummating a merger deal in an already heavily consolidated industry.

Cargill and Continental Grain agreed in August to buy Sanderson Farms for $4.53 billion before combining it with Continental’s Wayne Farms. But the deal has been delayed by a DOJ antitrust investigation and subjected to criticism by lawmakers who have cited “significant” antitrust concerns. Seeking Alpha, citing a CNBC report, said Friday the deal is unlikely to gain approval without some changes to the transaction.  

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About the Author

Jervie David Montejar
A food lover who wants to try every delicious dishes around him and spread the news to everyone to try it as well. Finding the latest trends about food and restaurants around Cebu and the rest of the world :) "Life is uncertain. Eat dessert first." -Ernestine Ulmer
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