Poultry Producer Agrees to $110 Million Fine for Chicken Price Fixing
If approved by the Department of Justice, Pilgrim's Pride won't owe any additional restitution to buyers and consumers affected by artificially inflated chicken prices.
Earlier this week, poultry producer Pilgrim's Pride announced that it had entered into a plea agreement with the U.S. Department of Justice and would pay a fine of $110.5 million to settle federal charges that it had engaged in price fixing.
In a statement, the company said that it had agreed to the fine "for restraint of competition that affected three contracts for the sale of chicken products to one customer in the United States." The plea agreement will have to be approved by the U.S. District Court of Colorado and, if it's OKed, it will mean that the DOJ's Antitrust Division will not bring any additional charges against Pilgrim's Pride, nor will it have to pay restitution to the consumers, restaurants, or supermarkets who had to pay its artificially inflated prices.
“Pilgrim’s is committed to fair and honest competition in compliance with U.S. antitrust laws,” Fabio Sandri, Pilgrim’s recently appointed CEO said. “We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s, providing certainty regarding this matter to our team members, suppliers, customers and shareholders."
According to the New York Times, the company reached this settlement several months after its former president and CEO Jayson Penn and former vice-president Roger Austin were both indicted on price-fixing charges. Penn, Austin, and both the president and vice-president of Claxton Poultry had been accused of fixing prices and "rigging bids" on broiler chicken.
In a previous class-action lawsuit, Pilgrim's Pride was accused of colluding with Perdue Farms, Sanderson Farms, and Tyson Foods to "fix, raise, maintain, and stabilize” the price of broilers by intentionally destroying flocks of hens to reduce the number of eggs, allowing them to inflate the prices of the chickens that were hatched. According to the lawsuit, the companies "knew and intended that their coordinated limitation and reduction in Broiler supply would artificially increase all Broiler prices."
Pilgrim's Pride is the first U.S. chicken processor to reach an agreement with the DOJ. The company is majority owned by a U.S. subsidiary of massive Brazilian meat processor JBS S.A. Food Dive reports that Pilgrim's produces around 13 billion pounds of poultry annually, which accounts for 17 percent of the total U.S. chicken market.
In June, Pilgrim's Pride put then-CEO Jayson Penn on a paid leave of absence, following his indictment on price fixing charges. Penn plead not guilty to the charges, and said that he was taking this time to "focus on his defense." In September, Pilgrim's reported that Penn was "no longer with the company," and announced that interim president Fabio Sandri would be taking the role permanently.
“I am humbled and excited to be selected by the Board to lead Pilgrim’s in our next stage of growth and opportunity for our team members,” Sandri said at the time. “I look forward to working alongside our strong team of professionals around the globe who are committed to realizing Pilgrim’s vision to be the best and most respected company in our industry.”