Sandwich Chain Alleges Beef Antitrust Conspiracy in Class Action Complaint

A Wisconsin sandwich chain filed a class action complaint Friday in the District of Minnesota, alleging four large beef processors engaged in anticompetitive activity that has harmed its business and all other commercial and institutional beef purchasers in the United States.

Erbert & Gerbert’s, Inc., represented by Larson King, filed suit against JBS USA Food Company Holdings; Tyson Foods, Inc.; Cargill, Inc.; and National Beef Packing Company.  The suit alleged that the defendants engaged in anticompetitive activity from at least 2015 until the present to raise the price of beef, creating artificial supply restraints. Erbert & Gerbert claims it and other commercial purchasers paid more for beef than they would have in a competitive market. 

The same defendants are facing an earlier antitrust lawsuit from grocers. Eleven state attorneys general have also asked for an antitrust investigation into the beef producers, who control 80 percent of the beef market. 

“This high industry concentration affords the Defendants market power with respect to both upstream fed cattle purchases and downstream Beef sales. As the “big four” players in this highly concentrated industry, the Defendants interact frequently at industry events and trade association meetings, and their respective executives are well-acquainted. The market is therefore highly conducive to collusion,” the Erbert & Gerbert’s complaint stated. The complaint cites a confidential witness who confirmed the allegedly anticompetitive activity. 

The plaintiff claimed the beef companies participated in slaughter reductions and that in 2015 there was a “marked change in pricing practices” and unexplained trends of beef prices diverging to benefit the defendants. The beef companies allegedly closed plants and did not expand during the time period. 

The complaint claimed the beef producers have broken federal antitrust laws and the antitrust laws of over half of the States. “Defendants have unlawfully benefited from their sales of beef because of the unlawful and inequitable acts alleged in this Complaint. Defendants unlawfully overcharged privately held commercial and institutional indirect purchasers, which purchased beef at prices that were more than they would have been but for Defendants’ unlawful actions,” the complaint said.