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Chicken Industry Executives Indicted for Criminal Price-Fixing and Bid Rigging

Lori Lustrin & Scott N. Wagner

On June 3, 2020, the Department of Justice (DOJ) indicted executives from Pilgrim’s Pride Corporation and Claxton Poultry Farms—two of the country’s largest chicken producers.  The criminal action was filed in the District of Colorado, where Pilgrim’s Pride is headquartered.  The individuals criminally charged are Pilgrim’s President and CEO, Jayson Penn and former Vice President, Roger Austin, as well as Claxton’s President, Mikell Fries, and Vice President, Scott Brady.

The targeted victims of Defendants’ criminal scheme include national restaurant and grocery chains that negotiate directly with Defendants, their companies, and other co-conspirators for the purchase of chicken products on a yearly, quarterly, or monthly basis.

For the past several years, Pilgrim’s and Claxton and nearly twenty other chicken suppliers have been defending multiple civil class action and opt-out suits in the Northern District of Illinois before Judge Durkin.  Plaintiffs in the civil actions include food distributors, grocery stores, and restaurants.  Scrutiny of the poultry industry grew to new levels in June of 2019, however, when the Department of Justice sought a stay of the civil actions to allow for its criminal investigation.  The announcement of a Department of Justice investigation subsequent to the initiation of a related civil antitrust case is a rare occurrence in antitrust litigation.

The fruits of that investigation have now been set forth in the DOJ indictment.  The criminal action alleges that from at least 2012 through at least 2017, Pilgrim’s, Claxton, and at least five other unnamed chicken suppliers participated in a conspiracy to exchange confidential pricing information provided to some of their largest customers.

According to the indictment, the purpose and effect of the conspiracy was to “suppress and eliminate competition through rigging bids and fixing prices and price-related terms.”  Among the series of damning communications set forth in the indictment are text messages, such as “[defendant] said to raise our prices,” to which another defendant responded, “Tell him we are trying!”  The criminal defendants each face significant prison terms and up to $1M in fines.

The Bilzin team will continue to monitor activity in the criminal action and provide insights on what it means for victims of the price-fixing and bid-rigging scheme.

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Lori Lustrin authored an article for the Association of Corporate Counseltitled CBD Regulation: The Food and Beverage Industry Must Join the Food Fight.