Tyson Drafts Deal With Consumers In Chicken Cartel Case

The consumers leading a proposed chicken price-fixing class action over an alleged industry wide scheme revealed a US$99 million settlement with Tyson Foods, part of a larger US$104 million “icebreaker” deal they disclosed in a Chicago federal court, reported Bloomberg.

The agreement, which includes a cooperation pledge, is the first between the consumer plaintiffs and the poultry processors they targeted in the US District Court for the Northern District of Illinois, where the consolidated case also includes antitrust claims on behalf of retailers and wholesalers.

The deal comes six days after Judge Thomas M. Durkin granted preliminary approval to a US$155 million settlement with wholesalers that calls for payments of US$80 million by Tyson and US$75 million by JBS SA subsidiary Pilgrim’s Pride, which accepted a US$108 million criminal fine the same day.

The consumer settlement also indicates that Tyson’s forthcoming deal with the retailer plaintiffs—disclosed so far only as an agreement in principle—is likely worth about US$42.5 million, given that the company has said it will pay US$221.5 million to escape the entire case.

The lawsuit accuses the top US chicken processors of inflating prices through long-term supply reductions, achieved by culling flocks of “breeder” hens, and through an index run by Eli Lilly & Co. subsidiary Agri Stats. The dispute recently added bid rigging claims by restaurant chains including Boston Market, Johnny Rockets, and Subway.

The poultry processors have also faced antitrust claims over alleged schemes to fix the wages of their mostly immigrant workforce and drive down compensation for the permanently indebted “modern-day sharecroppers” who raise chickens for them.

The cases are part of a wave of price-fixing suits involving livestock and protein, including pork, beef, turkey, tuna, salmon, and eggs. Tuna and chicken executives—among them the former CEO of Pilgrim’s—are also facing actual or potential prison time.

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