Monday, July 26, 2021

Food industry giants settle out of court

Some of the biggest food companies have been settling price-fixing cases out of court, avoiding trials that might have revealed the details of their cozy deals.

It seems they treat multi-million settlements and fines as merely a cost of doing business.

Most of the lawsuits have been filed against United States companies, but here in Canada at least one $1-billion class-action lawsuit was filed against the big supermarket chains and bread-making companies over price fixing.

The Bureau of Competition Policy brought charges against Loblaws, Wal Mart, Sobeys and Giant Tiger in January, 2018.

Loblaws, George Weston and Canada Bread then agreed to work with the bureau on its investigation.

The class-action lawsuits followed.

The biggest settlement without trial is the $10 billion Bayer AG agreed to pay to settle class-action lawsuits over Roundup weed killer.

Now there has been a parade of settlements over price-fixing in the U.S. poultry and pork industries.

The allegations there are that the companies all shared data with Agri Stats which, in turn, compiled reports for those companies. In other words, they learned what prices their competitors were charging and also their production-volume plans.

In Canada the major supermarket chains have shared their pricing data with A.C. Nielsen which then prepares reports that are purchased by all the chains. They learn exactly how much their competitors are charging for tens of thousands of items.

So far the Canadian government has done nothing to stop this practice.

But in the U.S., a court in Kentucky agreed to Pilgrim’s Pride offer to pay a fine of $110.5 million for price-fixing in the poultry industry.

And Pilgrim’s Pride paid $75 million in January to settle a class-action lawsuit on poultry price-fixing.

Tyson paid $221.3 million in January for its part in the same poultry industry price-fixing class-action lawsuit.

This July 23, JBS paid $20 million to settle a pork price-fixing class-action lawsuit, another $12.75 million in April and $24.5 million in January. The three lawsuits were filed by different groups of customers.

Smithfield Foods paid $83 million in January to settle its part of the pork price-fixing class-action lawsuit.

So who thinks these giant companies are suffering because of these expensive settlements?

In fact, I think the companies will simply squeeze suppliers and customers to maintain their profits.

It’s time for governments to break up these giants so there can be genuine competition in the food industry. 

And it’s not only the supermarket chains and dominant food-processing companies that ought to be broken up, but also those who supply farmers with inputs such as pesticides, fertilizers and farm machinery.