Tyson Foods, Cargill and two other large meat packers illegally conspired to lower livestock prices, squeezing ranchers and hurting traders who deal in cattle futures at the Chicago Mercantile Exchange, a federal lawsuit alleged Tuesday.
The suit accuses the meat-packing giants, including JBS and National Beef Packing Co., of violating U.S. antitrust law by depressing cattle prices since at least January 2015. It was brought by R-CALF USA, a nonprofit organization that represents cattle ranchers, and by four ranchers.
Industry data show the four companies named in the complaint control more than 80 percent of the market for U.S. fed cattle, which is cattle raised for beef production. The suit said the companies have increased their profit margins because consumers are paying high beef prices even though the packers are paying less for the product.
Gary Mickelson, a spokesman for Tyson, said, “We’re disappointed this baseless case was filed. As with similar lawsuits concerning chicken and pork, there’s simply no merit to the allegations that Tyson colluded with competitors. This complaint is nothing more than another transparent and opportunistic attempt by attorneys to make money for themselves at the expense of consumers.” He said Tyson depends on independent farmers and ranchers “as a vital part of our supply chain.”
The suit seeks class action status for all ranchers who sell to the big packers, and for traders who specialize in cattle futures and options. The futures market at the Merc was distorted by the companies’ manipulation of cash prices for livestock, said Bill Bullard, CEO of R-CALF.
The Merc, part of Chicago-based CME Group, is not accused of wrongdoing.
The alleged scheme cut ranchers’ income by about 7.9 percent since January 2015, Bullard said. He said he and his lawyers are still working to quantify losses felt by futures traders.
Bullard said his group’s case is bolstered by trade data and an inside account from a former employee of one of the packers. He said R-CALF brought its information last September to the federal Commodity Futures Trading Commission, which regulates the agricultural markets, but received no response.
The suit said the packers used tactics such as slowing purchases to create a glut of slaughter-weight fed cattle, closing slaughter plants despite strong demand for beef and confining their cash market trading to a single 30-minute time frame on Fridays. Smaller packers use the cash markets throughout the week, Bullard said.
The suit was filed in U.S. District Court in Chicago and assigned to Judge John Tharp Jr., said David Scott, an attorney for the plaintiffs.
