Dive Brief:

• Walmart has filed an antitrust lawsuit in Arkansas federal court against Pilgrim’s Pride, Koch Foods and 28 other poultry producing companies alleging that they conspired to increase prices for broiler chickens beginning in 2008, according to Law360.
• The complaint details two ways that the conspiring companies engaged in price fixing, including reducing the supply of chickens on the market and manipulating price indexes for wholesale chickens.
• The retailer said one of the participating companies, Fieldale Farms, has already agreed to settle claims against it for $2.25 million. 

Dive Insight:

The poultry industry has found itself in hot water as retailers and food manufacturers allege that the industry has colluded to raise prices for broiler birds through collusive mechanisms.

A number of other lawsuits since 2018 have targeted poultry producers for allegedly inflating chicken prices, including an action filed earlier this year by Kraft Heinz, Conagra Brands and Nestle against Tyson Foods and Pilgrim’s Pride. Darden Restaurants has also filed suit against Tyson Foods, Pilgrim’s Pride, Foster Farms and 15 other producers levying similar allegations of price fixing. Last year, Sysco and US Foods, two of the largest food distributors in the country, filed complaints against Tyson Foods, Pilgrim’s Pride and Sanderson Farms among others alleging similar price-fixing activities.

When allegations of scandal start flying in large industries, it’s common for companies to file "me too" complaints to ensure that they’ll snag their fair share of any settlement or judgment entered against the alleged wrongdoers.

So far, none of these lawsuits have been resolved, making it difficult to know what impact they may have on the industry. Conspiratorial activity and price fixing can be incredibly difficult to prove, and in today’s digital age, companies can communicate without a paper trail or sufficient evidence that they agreed to adjust their supplies.

While some food retailers are duking it out in the courtroom, Costco has taken matters into its own hands. The retailer is building its own chicken supply chain, which will offer it complete control and the ability to provide consumers with a high level of transparency in its production practices. The challenge with bringing poultry production in-house, however, means Costco must now run an entire agribusiness within its retail business.

The new supply is projected to save Costco 35 cents per bird, which adds up to $25 million annually. Considering that U.S. consumers are scarfing down nearly twice as much chicken as beef and pork, saving excess costs on poultry is a top priority for retailers.