DOJ FILES ANTI-TRUST SUIT AGAINST SANDERSON FARMS

Special to the Messenger

EAST TEXAS – The Department of Justice filed a civil antitrust lawsuit in the U.S. District Court for the District of Maryland against three poultry processors, to end a long-running conspiracy to exchange information about wages and benefits for poultry processing plant workers and collaborate with their competitors on compensation decisions in violation of the Sherman Act.

The lawsuit also alleges that two of the poultry processors violated the Packers and Stockyards Act by engaging in deceptive practices associated with the “tournament system,” which pits chicken growers against each other to determine their compensation.

“Through a brazen scheme to exchange wage and benefit information, these poultry processors stifled competition and harmed a generation of plant workers who face demanding and sometimes dangerous conditions to earn a living,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Today’s action puts companies and individuals on notice: the Antitrust Division will use all of its available legal authorities to address anticompetitive conduct that harms consumers, workers, farmers and other American producers.”

“I’m so pleased to see the close partnership between the Department of Agriculture (USDA) and the Justice Department has led to enforcement that is good for farmers,” said Andy Green, USDA’s Senior Advisor for Fair and Competitive Markets. “This resolution yields significant reforms to the poultry tournament system, including ending one of its most troubling aspects around deceptive base prices, and enhancing transparency in contracting, earnings and inputs that will protect and benefit growers — as USDA has proposed in our Packers & Stockyard Act rulemaking.”

The proposed consent decree with defendant poultry processors Cargill, Sanderson Farms and Wayne Farms would prohibit them from sharing competitively sensitive information about poultry processing plant workers’ compensation. It would also require the companies to commit to pay $84.8 million, collectively, in restitution for poultry processing plant workers who were harmed by the information exchange conspiracy.

These terms would expire 10 years after the consent decree is approved by the court.

Additionally, the proposed consent decree with Sanderson Farms and Wayne Farms would resolve alleged violations of the Packers and Stockyards Act, which prohibits, among other things, deceptive practices in poultry markets. As alleged in the complaint, poultry processors use a “tournament system” to adjust a chicken grower’s “base payment” based on how well the grower performs relative to other growers. The poultry processors, however, control nearly all the key inputs, including the chicks delivered to the growers and their poultry feed, that often determine a grower’s success. In allocating this financial risk to their chicken growers, Sanderson Farms and Wayne Farms failed to provide information that would have allowed their growers to evaluate and manage their financial risk. The proposed consent decree would prevent Sanderson Farms and Wayne Farms from penalizing chicken growers by reducing their base payments as a result of relative performance, while still allowing for incentive, bonus and other types of payments to growers.

The claims resolved by the resolutions announced today are allegations only and there has been no determination of liability.