Allegations of price manipulation persist in damaging the food industry.
Kansas City Customers and consumers alike gain from economies of scale since they result in increased productivity and cheaper costs. However, the advantages gained via strategic and operational dominance may be tainted, as seen by recent convictions for price fixing in the packaged seafood business and accusations of the practice in the US poultry industry.
The cases bring to light instances of corruption that either extends to the highest echelons of certain companies or is so deeply ingrained in them that even internal controls fail to identify it. The two biggest rivals in the packaged seafood market, StarKist Co. and Bumble Bee Foods, suffered reputational harm as a result of the misconduct.
In 2017, Bumble Bee Foods LLC entered a guilty plea and consented to pay a $25 million criminal penalties for its involvement in manipulating the prices of shelf-stable tuna. The president and CEO of the corporation were found guilty as a result of the case. In 2019, Bumble Bee filed for Chapter 11 bankruptcy, citing the amount of debt business had accrued as a result of the class-action litigation and price-fixing proceedings.
A $100 million fine was imposed on rival StarKist Co. for its involvement in the price-fixing case. A US District Court judge denied the company’s appeal to have the sentence lowered on the grounds that it lacked the funds to pay.
At the time, a Federal Bureau of Investigation spokeswoman stated, “There are serious and evident consequences for avaricious businesses that deceive the market and American consumers.”
Similar accusations are now being made against US chicken processors. Four executives from two major chicken factories were charged with conspiring to set grill chicken pricing at the beginning of June. The indictment listed Pilgrim’s Pride Corp. and Claxton Poultry as the two businesses. Among the executives charged was the CEO of Pilgrim’s Pride.
A few days later, Tyson Foods, Inc. announced that it was assisting with the inquiry, which marked a dramatic shift in the story. In April 2019, following the grand jury subpoena, Tyson discovered concerning details regarding the investigation’s procedures and voluntarily notified the Department of Justice. The management of the company wants to get away.
penalty under the leniency programme of the DOJ Antitrust Division.
These two instances of price fixing in the food business are recent, but regrettably, they are not unique occurrences. A group of mushroom farmers in Pennsylvania are being sued for colluding to hike prices, and US beef packers are being investigated by the DOJ for engaging in anticompetitive behaviour to lower the prices paid to cow producers.
In the last ten years, there have been more lawsuits involving US dairy farmers, US potato processors, and Canadian packaged bread that have led to guilty pleas or settlements. The Competition Bureau of Canada claimed in 2018 that seven Canadian bread firms had committed indictable offences during the remarkable 14-year Canadian bread scheme. George Weston Ltd., one of those businesses, acknowledged its part in the plan in 2017.
Even though each price-fixing incidence is unique, they are all the result of inadequate internal controls or bad leadership. For many years, consumer confidence in the quality of food goods produced by the biggest corporations in the sector has been declining. Any further claims of market manipulation will just confirm the beliefs of far too many people.