Price-Fix Lawsuit Advances    07/27 14:30

   Beef Price-Fixing Class Action Moves Forward Against Four Largest US Packers

   A federal court certified a class action lawsuit against four major beef 
packers -- Cargill, JBS, National Beef and Tyson -- alleging cattle price 
manipulation.

Todd Neeley
DTN Environmental Editor

   LINCOLN, Neb. (DTN) -- Allegations that the nation's largest beef packers 
conspired to elevate beef profit margins will be allowed to proceed as a class 
action lawsuit, after a judge in the U.S. District Court for the District of 
Minnesota certified a class of producers.

   The court also certified three damages classes, including beef buyers from 
large commercial purchasers down to individual consumers.

   Together, Cargill, JBS, National Beef and Tyson control more than 80% of the 
fed cattle bought, slaughtered and sold in the U.S.

   The class approved by the court includes entities that sold fed cattle 
directly to the companies, from June 1, 2015, to Feb. 29, 2020.

   This means the case will proceed on the merits, discovery and trial on 
behalf of direct cattle sellers.

   The cattle plaintiffs relied on expert witness Russell Lamb, president and 
co-founder of Monument Economics Group, who used an economic model that 
allegedly shows fed cattle prices were suppressed by 6.7% during the class 
period.

   By the end of 2015, the price fell from $170 per hundredweight (cwt) to $120 
per cwt.

   The companies challenged the expert witness on several grounds, but the 
court rejected their challenges, according to court documents.

   "There are thousands of persons or entities within the United States that 
directly sold to a defendant one or more fed cattle for slaughter from June 1, 
2015, to Feb. 29, 2020," the court said in its order.

   DTN reached out to the four companies for comment.

   The plaintiffs allege the companies used several methods to raise beef 
prices.

   That includes deliberately reducing how much cattle they bought and 
slaughtered to suppress demand and drive down prices. They also allege the 
companies coordinated among themselves to maintain control of the market 
without triggering competitive pricing.

   The complaint also claims the companies jointly managed slaughter and 
created a buildup of cattle at feedlots to pressure feeders to sell at reduced 
prices.

   The lawsuit alleges violations of the Sherman Act, the Packers and 
Stockyards Act and the Commodity Exchange Act.

   The federal court also denied certification on four other potential classes, 
according to court documents.

   That includes feeder plaintiffs who sold cattle to feedlots then sold to the 
companies. Another rejected class was the so-called exchange class of people 
who held long positions in the live cattle futures on the Chicago Mercantile 
Exchange, as well as another class seeking injunctive relief.

   The court also denied certification for all shareholders of U.S. Premium 
Beef, LLC, because it holds a 15% stake in National Beef.

   A series of class actions and individual lawsuits were filed against the 
beef packers starting in 2019.

   In September 2021, the court began consolidating the direct purchaser 
plaintiff cases, and in October 2021 the court coordinated all cases.

   In 2022, additional individual cases were filed in federal court, and the 
Judicial Panel on Multidistrict Litigation transferred the cases to the federal 
court in Minnesota.

   Fed-cattle prices increased steadily between 2009 and 2014, because of 
demand and a shortage of fed cattle following the droughts of 2011 through 2013.

   Then, after prices peaked in November 2014, the cattle industry expected 
fed-cattle prices to stabilize in 2015 and continue around that level for 
several years. Instead, that did not occur.

   Todd Neeley can be reached at todd.neeley@dtn.com

   Follow him on social platform X @DTNeeley




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