The Hidden Costs in Your Grocery Bill: How Price Fixing Hurts Consumers
When you browse the aisles of your local grocery store, you might assume that the prices you see are the result of fair competition and market forces. But a closer look reveals a troubling reality: price fixing is rampant in the food industry, and it's driving up costs for American families.
What is Price Fixing?
Price fixing occurs when companies collude to set prices, rather than allowing market competition to determine them. This illegal, anti-competitive practice distorts the market in favor of large corporations, hurting consumers, farmers, and small businesses in the process. Price fixing is one of many harmful symptoms of over-consolidation in the food industry.
The Worst Offenders
Within the food sector, meat, egg, dairy, and sugar companies are among the largest offenders. Beef and poultry producers, especially, have been embroiled in a number of price fixing scandals just in the last few years. In 2021, Pilgrim's Pride agreed to pay $75 million, while Tyson Foods settled for $221.5 million, to resolve claims that the companies – along with other poultry producers – conspired to inflate chicken prices. Previous lawsuits found these and other companies drive up prices by destroying eggs, retiring breeder hens early, and killing newly hatched chicks, among other strategies.
Last year, a jury found egg producers Cal-Maine Foods and Rose Acre Farms guilty of conspiring to fix prices between 2004-2008, ordering the companies to pay $53 million.
Most recently, sugar giants like United Sugars, Domino, and Cargill have been accused in multiple lawsuits of conspiring to artificially raise prices since at least 2019. Pork giant Hormel Foods also agreed to pay $11.7 million in April 2024 to settle price-fixing claims brought by pork purchasers.
The beef and dairy industries are not immune either. In 2023, JBS paid $25 million to settle beef price-fixing allegations, while Tyson, JBS, Cargill, and National Beef Packing Co. all faced additional lawsuits for alleged price manipulation. In 2017, major dairy producers were forced to pay consumers $52 million for a scandal in which over half a million young cows were prematurely slaughtered in an effort to raise prices. Then in 2019, dairy cooperatives were fined $220 million for using similar tactics.
And it's not just manufacturers. Major grocery chains have also been implicated in unethical pricing practices. A 2022 FTC report found chains took advantage of the pandemic to hike prices and boost profits. Grocery prices are up 21 percent in the last three years while major chains saw revenue spikes up to 36 percent. These trends have prompted lawmakers to press President Biden to investigate alleged price fixing within the grocery sector.
Big Fines, Bigger Profits
Since 2000, top food and agribusiness companies have been fined well over $2 billion for price fixing and anti-competitive practices. But fines often amount to little more than a rounding error for these massive corporations. During the same periods they've been accused of price fixing, many companies have posted record profits. For example, although Tyson has been implicated in several price fixing scandals in over the past few decades, its total combined fines amount to just 0.23 percent of its total profits since 2009. Clearly, price fixing fines are just the cost of doing business for many of these corporations.
| Company |
Violation(s) Related To
|
Fines Since 2000 |
|---|---|---|
|
Archer Daniels Midland
|
High fructose corn syrup |
$446,250,000
|
| Dairy Farmers of America | Dairy |
$378,600,000
|
| JBS | Beef, Pork, Poultry |
$358,173,572
|
| Smithfield Foods (WH Group) | Pork |
$269,364,300
|
| Tyson Foods | Poultry |
$135,125,000
|
| StarKist | Tuna |
$120,000,000
|
| Wayne-Sanderson Farms | Poultry |
$87,550,000
|
| Post | Eggs |
$75,000,000
|
| Cargill |
Poultry, Salt, High-fructose corn syrup
|
$46,705,000
|
| Cal-Maine Foods | Eggs |
$28,000,000
|
| Land O' Lakes | Eggs |
$25,000,000
|
| FCF Co. | Tuna |
$25,000,000
|
| Perdue Farms | Poultry | $21,250,000 |
The Agri Stats Scandal
It’s likely that many price fixing schemes in the food sector have been facilitated by Agri Stats, a data company that provides detailed pricing, cost, and production data to major food producers. Agri Stats subscribers, which account for over 90 percent of the broiler chicken and turkey markets and over 80 percent of the pork market, can use the data to monitor each other's production plans and ensure that no one tries to gain market share by increasing production.
In September 2023, the Department of Justice (DOJ) accused Agri Stats of enabling price fixing in the poultry industry by allowing competitors like Tyson Foods, JBS, Cargill, and Smithfield to coordinate supply cuts and price hikes. In May 2024, a judge ruled that Agri Stats must face the DOJ’s lawsuit.
The Need for Reform
It's clear that major food companies are not being adequately held accountable for price fixing. While many have been forced to pay for their illegal practices, fines alone are not enough to deter this behavior, as illicit profits often far exceed the penalties. Criminal charges for executives and restrictions on data sharing are needed.
But to truly address this issue, we must rein in the power of large food corporations. Consolidation has made it easier for a handful of massive companies to collude and manipulate prices – to the detriment of all American consumers.
No company should be above the law, no matter how powerful. It's time to put an end to these deceptive and illegal practices and create a food system that works for everyone, not just a privileged few.
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