Sysco sues the four largest beef producers for price-fixing

Wholesale distributor Sysco filed a lawsuit in Texas against the four largest beef providers — Cargill, JBS, Tyson Foods and National Beef Packing — for working together to drive up the price of beef.

In the lawsuit, Sysco charged that the companies, which control up to 85% of the beef market, enacted a “scheme to artificially constrain the supply of beef entering the domestic supply chain” since at least 2015. Sysco, the largest distributor of wholesale food in the U.S., said the beef giants colluded to limit the number of cattle slaughtered in an effort to pay ranchers less while simultaneously boosting their own profits as a result of “artificially” inflated prices.

In a statement to Food Dive, Cargill spokesperson Daniel Sullivan said the company “is confident in our efforts to maintain market integrity and conduct ethical business. We believe the claims lack merit and intend to vigorously defend our position.”

A Tyson representative declined to comment on the lawsuit.

The other beef processors did not respond to a request for comment.

Sysco said in the lawsuit there are various factors as to why beef processors’ conspiracy to fix prices is able to occur, including “producer concentration, high barriers to entry, inelastic demand, the commodity nature of beef, frequent opportunities to conspire, strong demand, market share stability, and decreased imports.”

Meat and poultry processors have faced heavy criticism recently, with prominent Democrats in Congress excoriating executives for achieving record-high earnings amid inflation. The price of ground beef has increased by 13.6% during the past year, according to the Bureau of Labor Statistics.

In response, beef manufacturers have argued that heightened transportation and supply chain costs are a significant factor behind the higher prices. The U.S. departments of Justice and Agriculture announced in February they are investigating potential concentration in the beef sector.

While it did not admit to any wrongdoing, JBS in February agreed to a $52.5 million settlement in a beef price-fixing lawsuit in which wholesalers and grocers accused it, along with the three other beef processors named in Sysco’s suit, of conspiring to suppress cattle amounts to drive up prices.

Charges of price-fixing continue to be an issue throughout the meat industry.

Last week, Smithfield Foods settled a suit for $42 million filed by restaurant owners and caterers. They claimed the pork giant was artificially increasing prices. In addition, executives from Pilgrim’s Pride and Claxton Poultry were found not guilty of conspiring to fix poultry prices, the third consecutive time a trial against the chicken executives filed by the DOJ failed to convince a jury.

Editor’s note: This story has been updated to include a statement from Tyson.