Yum Brands, owner of Kentucky Fried Chicken and Pizza Hut, is suing OSI because its unit in China, Shanghai Husi, supplied it with chicken that was contaminated and old.
A major scandal emerged over Shanghui Husi after a television station employee got hired by Shanghui and gathered video and other evidence of wrongdoing.
McDonald's and some other fast-food chains were also implicated, both in the Chinese market and products sold by the chains in their stores in other nations, including the United States.
Yum Brands said the food-safety scandal caused its sales to drop by 13 per cent in China.
“The company plans to vigorously pursue legal action against OSI and Husi to recover damages from the incident,” Yum said in the filing.
OSI, with headquarters in Aurora, Illinois, also announced a deal to partner with a British company that will supply beef for its European market.
Bloomberg news agency reported that McDonald’s China has hired a China food safety chief and will increase unannounced audits of suppliers.
McDonald’s suppliers McKey Food Services Ltd., Cargill Inc, Hormel Foods Corp., Trident Seafoods Corp. and Fujian Sunner Development Co. are ramping up meat production to replace products previously sourced from OSI China, Bloomberg says.
An overseas news report has suggested OSI might withdraw entirely from the China market, but OSI says it remains committed to China and has appointed Golden State Foods subsidiary KanPak China to manage its Guangzhou facility that produces vegetable and fruit products.