Outside the Fence One Time Too Many

Contrary to folklore, three times is rarely a charm. The number three, in fact, often carries woe: “Three strikes and you’re out,” for example or “Bad news usually comes in threes.”

U.S. Department of Justice (DOJ) prosecutors rediscovered these portentous axioms July 7 when, for the third time in less than a year, a jury in Denver failed to convict poultry company executives of federal charges of conspiracy to fix prices.

The first two price-fixing trials–one in late 2021, the other in early 2022–ended in mistrials.

Remarkably, as DOJ prosecutors considered a third trial, the federal judge who presided over the second “summoned… (the) head of the Justice Department’s Antitrust Division to Denver… to explain why, after two hung juries, the government could still win conviction,” reported the Denver Post July 8.

In fact, the judge urged, DOJ should think hard about taking a third swing because “We know that the evidence couldn’t persuade 12 people… twice.”

Justice attorneys, however, plowed on and–as the judge suspected–all five defendants in the third trial were found not guilty.

If the first two mistrials were a surprise; the third was a stunner. DOJ had what looked like a bulletproof case against poultry company executives–five with Pilgrim’s Pride, the second largest poultry producer in the $95-billion-a-year chicken market, and one each at Claxton Family Farms, Tyson Foods, Koch Foods, Case Farms, and George’s Inc.

The DOJ, explained forbes.com, charged that company “executives worked together to keep prices paid to poultry farmers low while raising costs for consumers at grocery stores and restaurant chains. The scheme,” it alleged, “impacted sales at Pilgrim’s Pride by $361 million–more than $1 for every American.”

Better yet, DOJ had two witnesses it believed could deliver proof. The first was Tyson Foods, the nation’s largest chicken producer that, reported the Denver Post, “said in 2020 it was cooperating in the federal probe, taking advantage of a government policy to grant leniency to companies… first to disclose illegal price-fixing.”

The second was an insider, “Robert Bryant, a longtime Pilgrim’s Pride employee” who “testified about an industry-wide agreement to share price and bid information to inflate profits or limit losses, depending on market conditions.”

As a star witness, though, Bryant was less than shining; he “admitted on cross-examination that he had lied to the FBI ‘multiple times’ on matters unrelated to the price-fixing probe…” After that revelation, the case seemed to slowly crumble.

The loss, however, hasn’t cooled DOJ’s pursuit of other poultry executives in criminal court. Presently, “(P)rosecutors have charged four individuals and two companies… in related price-fixing cases that are moving to trial, also in Denver.”

The DOJ isn’t alone. Recently, Sysco, “the nation’s largest food distributor,” filed “a federal lawsuit accusing Tyson Foods, JBS, Cargill and National Beef” of having “conspired to suppress the number of cattle being slaughtered… to help drive up the price of beef,” explained the Washington Post July 7. 

As criminal cases, civil suits, and millions of dollars in fines levied against Big Meat’s big players continue to stack up, it’s clear that current efforts by Congress and the Department of Justice aren’t enough to keep these ag elephants inside the nation’s aging antitrust fences.

Part of the problem, explains Peter Carstensen, professor of law emeritus at the University of Wisconsin and an expert in ag antitrust, is the complicated nature of antitrust conspiracy. “These are complex cases that require great skill to prosecute,” he says, pointing to the DOJ’s triple defeat in Denver. “Winning is very hard.”

Civil lawsuits may offer a remedy, he suggests, but with one key refinement. “Since hundreds of millions of dollars in civil fines seem to be of little deterrence to these ag companies,” Carstensen notes, “maybe they should lose their corporate charters if caught in violation of antitrust laws. Call it the antitrust ‘death penalty.’”

Come to think of it, that’s how farmers often deal with livestock that can’t stay within fences: they lose their charters. Forever.

© 2022 ag comm

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