Customers complain about the increase in hamburger prices and McDonald’s complains about the increase in the price of meat. The restaurant company has taken legal action against the giants of the American meat industry, accusing them of fixing the prices of beef, the ingredient in their hamburgers, through agreements to limit competition.according to a 100-page lawsuit filed in a New York court.
The lawsuit targets JBS, Tyson, Cargill and National Beef and several of their subsidiaries, the nation’s meat giants. In their lawsuit, McDonald’s is asking for a jury trial to award unlimited damages and for the court to order an end to the alleged price-fixing conspiracy.
“Beginning at an uncertain time, but at least from about January 1, 2015, and continuing to the present day and with effect thereafter, the defendants and their co-conspirators engaged in in a contract, combination or conspiracy to restrain trade in violation of section one. of the sherman act [que protege la competencia]”says the lawsuit, which this newspaper had access to. “The object of their conspiracy was to fix, raise, the price of beef sold to the plaintiff and others. to stabilize and maintain at competitive levels, that is, prices artificially higher than beef prices without the conspiracy. The defendants’ conspiracy was effective and they achieved that goal,” he said .
The alleged anti-competitive practices that McDonald’s accuses its meat suppliers of working in both directions. It ensures that they coordinate payment below competitive prices for the main input in beef production, cattle ready for slaughter, with the purpose and effect of keeping the their margins and the price of beef above competitive levels sold to McDonald’s and other customers.
In addition, the defendants and their co-conspirators reduced the supply of stock and beef ready for slaughter, which over time also artificially increased the price of beef, always according to demand.
The four defense agencies play a key role in the region. The lawsuit notes that in 2018, they supplied 80% of the more than 25 million pounds (about 11,300 tons) of fresh and frozen beef supplied to the US market . In addition, they controlled approximately 81%-85% of the domestic market-ready fed cattle processed (or slaughtered) during the period covered by the lawsuit. .
So McDonald’s joins the investigations launched by the Department of Justice and the Department of Agriculture regarding whether large meat companies have set beef prices in the United States.
In addition to the high concentration in the wholesale beef industry, the lawsuit points to other structural factors in the US market that have made the defendants’ alleged agreements or collusive actions possible. For example, meat companies are at the top of the supply and distribution chain which ultimately delivers beef to market. The accused companies buy cattle from the country’s feedlots, slaughter and package the cattle for beef, and ultimately sell the beef to beef buyers such as McDonald’s .
The company alleges in its lawsuit that frequent meetings between executives and key employees facilitated the collusion.. “Trade association conferences and other business events provided convenient opportunities to exchange information, plans and strategies, as well as build relationships,” he says. “The defendants took advantage of these opportunities to promote their contentious supply restrictions,” he said.
Beef producers have denied wrongdoing in related cases that were upheld in federal court in Minnesota. The plaintiffs include BJ’s Wholesale, Sodexo, Target and Aldi, according to Reuters. Beef producers also face lawsuits from American consumers, livestock producers and others seeking class action status and monetary damages in the Minnesota lawsuit.
