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McDonald’s Corporation has filed a lawsuit against the U.S. meat industry’s biggest meatpackers, accusing them of conspiring to fix beef prices. The fast food giant alleges the companies engaged in a nearly decade-long price-fixing scheme, violating antitrust laws and artificially inflating the cost of beef sold to the company.
The suit filed on Oct. 4 in the U.S. District Court for the Eastern District of New York against Tyson, Cargill, JBS and National Beef alleges they “implemented their conspiracy by coordinating, manipulating, or agreeing to pay less than competitive prices for the main or primary input in producing beef, namely, slaughter-ready cattle for the purpose and with the effect of fixing, increasing, stabilizing or maintaining above competitive levels their margins on, and the price of beef sold to, plaintiff and others.”
McDonald’s said that, beginning at least Jan.1, 2015, it purchased beef directly from the meatpackers who controlled 80% of the U.S. beef supply and 81-85% of the domestic fed cattle slaughter market during the alleged conspiracy period.
The lawsuit claims the Big Four meatpackers exploited their control over the beef supply chain to collusively manipulate cattle prices and beef pricing. The defendants allegedly reduced beef output by coordinating fed cattle prices and slaughter volumes, driving up prices for buyers like McDonald’s. The suit continued that frequent meetings at industry events allowed these companies to exchange information and strategies, further enabling their conspiracy.
The lawsuit cites USDA data, which showed that the average spread between farm value of cattle and wholesale beef prices dramatically increased during the alleged conspiracy period from 2015 to 2021. Before the conspiracy, the average spread was about $34, but it surged to $82.78 during this period, a 143% rise.
The lawsuit claims the defendants conspired to underpay for fed cattle while maintaining inflated beef prices, leading to higher profit margins. This manipulation allowed meatpackers like Tyson and JBS to report record revenues and margins, McDonald’s said. Industry reports noted that these companies stopped competing, enabling them to reap enormous profits through price-fixing, the fast-food giant said.
McDonald’s is asking for a jury trial and for a judgment of three times the damages sustained by the corporation as a result of violations of the Sherman Act.
This isn’t the first time beef suppliers have faced such allegations. In 2020, the Department of Justice’s Antitrust Division issued civil subpoenas to four defendants after Agriculture Secretary Sonny Perdue raised concerns that meat suppliers were paying lower cattle prices without passing the savings to buyers like McDonald’s. In 2021, a group of 26 U.S. senators further escalated the issue, calling for an expanded investigation.
Lawsuits have also been brought by retailers, food distributors, ranchers and other fast food outlets alleging collusion by the Big Four meatpackers. Some of the cases are still pending and others have been settled.
In 2022, JBS paid $52.5 million in a lawsuit brought by Central Grocers in 2020. JBS denied admitting liability but said that settling was in its best interest, according to Reuters. The company also noted it would continue defending against beef price-fixing claims brought by other plaintiffs. — Charles Wallace, WLJ contributing editor
