A criminal investigation is on, at large chicken processing outlets.
Chicken processors have been accused of keeping chicken prices very high. A probe has been launched by the US Department of Justice, over the issue.
Some of the chicken producers that have a wide market are Pilgrim’s Pride (PPC), Tyson Foods (TSN) and Sanderson Farms (SAFM). Share prices of these companies have fallen drastically, after the probe. These companies control more than 50 percent of the chicken industry, says a business publication, Watt Poultry USA.
The Justice Department had given a notification to Tyson in April and has subpoenaed the company to give evidence. It had convened a grand jury.
But on Friday, the judge has been asked by a federal judge from Illinois to stop evidence collection regarding the lawsuit, for a period of six months.
The Department of Justice is investigating the fixing of poultry prices of these companies. There are almost 12 companies that are already facing civil lawsuits in the industry.
Pilgrim’s Pride spokesperson has however strongly denied such anti-competitive conduct by the company.
Sanderson Farms has stated that the company has not been subpoenaed regarding the investigation. The claims are without merit and we defend the case, says the company.
Tyson has said that these are baseless allegations and that the interrogation by the Justice Department does not change its point of allegations.
The case was first brought in by a food service distributor named Maplevale Farms in 2016. It had complained that chicken companies have been conspiring and combining to fix broiler chicken prices and to stabilize their prices. Broiler chicken is the most used type of chicken in the United States.
Maplevale alleges that these companies limit chicken production to increase prices.
Walmart has also joined in the fight against the poultry companies last month. Walmart accuses them of killing hatchlings in order to create a scarcity, which in turn increases prices.