Pilgrim’s to pay $110.5 million fine in U.S. price-fixing investigation

To date, 10 executives from at least five companies have been indicted by a federal grand jury in Denver as part of the ongoing investigation.

The second-largest poultry processor in the country, Pilgrim’s Pride Corp., said on Wednesday that it will pay a $110.5 million fine as part of a plea agreement with the Justice Department, which is investigating price fixing in broiler chicken products. Pilgrim’s announced the plea deal one week after a second former chief executive was indicted on charges of being part of a multiyear conspiracy among industry executives to rig bids and fix prices. The first CEO was indicted in June.

To date, 10 executives from at least five companies have been indicted by a federal grand jury in Denver as part of the ongoing investigation. A Justice Department spokesperson was not immediately available for comment about the plea agreement with Pilgrim’s.

Americans spend tens of billions of dollars annually on meat. Roughly 40% of that is for broiler chicken, according to USDA data. Beef makes up 30% of meat consumption, followed by pork, at 23%, and turkey at 6%. The price-fixing conspiracy resulted in higher prices for consumers, said the Justice Department.

Fabio Sandri, on the job for three weeks as Pilgrim’s new chief executive, said that under the terms of the agreement, there will be no further charges against the company, which is based in Greeley, Colorado, and majority-owned by JBS SA of Brazil. The agreement, which must be approved by a federal judge in Denver, involves “restraint of competition that affected three contracts for the sale of chicken products to one customer,” said Pilgrim’s.

“We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s, providing certainty regarding this matter to our team members, suppliers, customers, and shareholders,” said Sandri in a statement. Pilgrim’s is scheduled to release its third-quarter earnings report on Oct. 29. The government fine will be listed as a miscellaneous expense, said the company.

Tyson Foods, the largest U.S. poultry processor, said in June that it was cooperating with the Justice Department in the price-fixing investigation as part of an application for corporate leniency, which would shield the company from criminal charges. Tyson is based in Springdale, Arkansas.

Four of the 10 indicted executives are from Pilgrim’s, including Penn, who left the company following his indictment in June, and his predecessor, William Lovette. The government did not provide the corporate affiliation of the indicted men, but some are well enough known that the links could be made. Besides Penn and Lovett, they include Mikkel Fries, president of Claxton Poultry Farms in Georgia, and Tim Mulrenin, a sales executive at Perdue Farms, based in Salisbury, Maryland.

According to the Justice Department, the price-fixing conspiracy operated from at least 2012 until at least early 2019.

The five largest U.S. poultry processors are, in order, Tyson, Pilgrim’s, Sanderson Farms, Perdue, and Koch Food.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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