McDonald’s says Tyson and other suppliers fixed beef prices

McDonald’s is suing some of its suppliers over allegations they conspired to sell the fast food chain’s beef at artificially high prices, violating federal antitrust laws, according to a new lawsuit.

McDonald’s company. alleges that suppliers coordinated to set, raise, stabilize or maintain the price of beef at an “extra-competitive level.” Nine suppliers, which include companies such as Tyson Foods Inc., JBS S.AAND Cargill Inc.violated the Sherman Act with their conduct, McDonald’s said in its complaint to the U.S. District Court for the Eastern District of New York.

“Defendants and their co-conspirators implemented a conspiracy to collusionally restrict the supply of slaughter-ready cattle and beef, which, over time, artificially increased the price of beef sold to Plaintiff and others,” McDonald’s said.

According to the complaint, McDonald’s is seeking a declaratory judgment confirming the existence of a conspiracy, damages in the amount of three times the damage suffered and pre- and post-judgment interest. They also ask the District Court to issue a permanent injunction prohibiting the defendants from continuing to perform their duties for an indefinite period.

Neither plaintiff immediately responded to a request for comment Friday.

The complaint says the fast food giant claims the conspiracy began in 2015, when some of the defendants saw their profit margins decline on beef sales after years of drought. In response, the defendants agreed to jointly reduce and manage slaughter volumes, which resulted in reduced beef supplies.

The complaint alleged that by reducing beef volumes and restricting the market, the defendants created artificially high beef prices to increase their profit margins. McDonald’s maintains that some defendants even intentionally closed production plants and refrained from increasing production capacity during this period.

“Defendants’ ability to reduce beef production while maintaining inflated beef prices during the period of the conspiracy provides compelling circumstantial evidence about their conspiracy,” McDonald’s said.

Comparing the slaughter capacity and beef production of nonconspiratory beef producers and defendants, the complaint shows that the former grew in both categories over the same period.

McDonald’s said that in 2020, the U.S. Department of Justice served Tyson Foods, JBS and Cargill with subpoenas to investigate alleged price fixing. In a subsequent investigation, McDonald’s found that open records revealed testimony from cattle ranchers admitting the existence of the alleged conspiracy.

During the conspiracy period, the defendants reported record profits, and JBS USA reported net revenues of $27.18 billion in 2021, a 25.8% increase over 2014 profits, according to the complaint.

McDonald’s maintains that the defendants concealed their conduct using a number of tactics, including: avoiding a documentary trail through telephone communications; offering pretextual explanations for cattle prices and plant closures; the complaint states that they falsely represented that they complied with antitrust laws.

The case is McDonald’s Corp. v. Cargill Inc., EDNY, No. 1:24-cv-07017, Complaint 4/10/24.