Justice Department Investigates Chicken Industry

The U.S. Justice Department has launched a criminal investigation into allegations that top poultry processors colluded to keep prices artificially high.

The probe came to light after federal attorneys sought to intervene in a long-running lawsuit in which customers accused chicken processors, including Tyson Foods Inc., Pilgrim’s Pride Corp., Sanderson Farms Inc., and Perdue Farms Inc., of illegally cooperating.

A federal judge granted the intervention. The processors have denied the accusations.

Collusion allegations have pitted retailers and food distributors that are some of the country’s biggest chicken buyers against a $65 billion U.S. poultry industry that last year produced 42.6 billion pounds of chicken meat.

Plaintiffs ranging from independent restaurateurs to Walmart Inc. and food distributors such as Sysco Corp. have sued chicken companies over the last three years, alleging they improperly shared data and influenced meat-industry benchmarks to push up chicken-meat prices.

Meat companies have denied claims that they cooperated to boost prices, attributing higher prices to stronger demand and reduced production after a tough period for the U.S. poultry industry in the late 2000s.

Wholesale prices for whole chickens are down about 2 percent this year but are up 17 percent from mid-2012, when the U.S. Department of Agriculture began estimating national prices.

More broadly, prices for chicken, pork and beef products have fallen over the past five years as low grain prices helped the U.S. meat industry push production to record levels, and new plants boosted processing capacity.

Source: Wall Street Journal