7/13/22

Sysco, the largest foodservice provider in the country, has filed suit against the four biggest beef processing companies over the accusation that they formed a conspiracy and fixed prices. They seek injunctive relief and treble damages through U.S. antitrust laws.

Cargill, JBS, Tyson, and National Beef may finally have to answer as to whether or not they colluded to fix beef prices that favored them over ranchers. I say finally because a similar charge was made around two years ago in Minnesota by various grocery stores, wholesalers, and ranchers, but which is still pending. The hope now is that the sheer size and clout of a company such as Sysco will push the matter into the courts for a decision once and for all.

However, that may prove to be a false hope, because Sysco has already gone down this road twice before. In 2018, Sysco and US Foods filed separate lawsuits against Tyson Foods Inc, Pilgrim’s Pride Corp, Sanderson Farms, Perdue Farms, and others for fixing chicken prices. Just last year, Sysco filed suit against Smithfield, Hormel, Tyson, Clemens Food Group, JBS USA and Seaboard Foods accusing them of fixing pork prices. Neither of those cases has resulted in a decision.

To the extent that past actions are a reliable predictor of future behavior, it should not come as a surprise that this is happening. Sysco has covered chicken and pork, it only makes sense that they go for beef.

This lawsuit is just one of many that have been filed by providers. Plaintiffs range from restaurants to massive foodservice providers like Sysco and US Foods. Having sued twice before, with no real movement as a result, it does not appear that Sysco’s clout is enough to persuade a jury. After all, price fixing is devilishly hard to prove. But what we can count on is that Sysco’s clout will make this a fun case to watch.

Cheers!