McDonald’s Sues Meat Companies for ‘Hamburglaring’ Consumers

Federal case alleges Cargill, JBS, Tyson, Swift and National Beef conspired to raise beef prices.

Ronald McDonald isn’t clowning around. His namesake company is suing some of the world’s largest beef producers. They include Cargill, JBS, Tyson, Swift and National Beef. Together, they account for more than 80% of the beef supplied in the U.S. market.

According to an October 4 complaint filed in a New York Federal Court, McDonald’s Corporation alleges the meat companies, working with co-conspirators, collaborated to create artificially high beef prices. McDonald’s claims the conspiracy dates back to at least 2015 and remains ongoing.

“Defendants and their co-conspirators implemented their conspiracy through one or more anticompetitive means,” McDonald’s alleges in its lawsuit. “For example, and without limitation, they implemented their conspiracy by coordinating, manipulating, or agreeing to pay less than competitive prices for the main or primary input in producing beef, namely, slaughter-ready cattle for the purpose and with the effect of fixing, increasing, stabilizing or maintaining above competitive levels their margins on, and the price of beef sold to.”

Officials with meat companies named in the lawsuit did not respond to questions for this article.

Previous allegations resurface

In the lawsuit, McDonald’s notes the U.S. Department of Justice previously launched investigations into the same companies for fixing beef prices. In 2020, then Agriculture Secretary Sonny Perdue announced USDA was investigating suspiciously high beef prices. At the time, he said the price difference between live cattle and wholesale beef was “historically high.”

In 2021, twenty six U.S. senators sent a letter to the Justice Department asking them to determine if the “stranglehold” large meatpackers have over the beef processing market violated antitrust laws or the principals of fair competition.

“From our perspective, the anticompetitive practices occurring in the industry today are unambiguous and either our antitrust laws are not being enforced or they are not capable of addressing the apparent oligopoly that so plainly exists,” the senators said at the time.

McDonald’s says information unsealed from previous litigation brought by cattle ranchers includes testimony confirming a conspiracy. An anonymous employee of a Swift plant in Cactus, Texas, testified that his company agreed to reduce their cattle purchase and slaughter volume for the “purpose and effect” of increasing their margins.

That allegation is supported by hard data according to McDonald’s. In the court filings, company officials included charts showing quarterly slaughter volumes for the meat giants fluctuated in tandem over the course of the alleged conspiracy timeline. The data also shows the large meat companies curtailed their slaughter volumes, even as smaller companies were increasing theirs.

What happens next?

McDonald’s says the large meat companies have violated the terms of the Sherman Antitrust Act. It says it is entitled to a judgement for three times the damage it has sustained as is common practice in antitrust cases. McDonald’s also wants the defendants to cover its legal fees.

Earlier this year, McDonald’s USA President Joe Erlinger penned a letter to “fans” defending higher burger prices under the golden arches. He cited historic rises in supply chain costs as a major contributing factor. No word yet if Erlinger plans to reduce food prices should his company prevail in the case.

EDITOR’S TAKE:

Let me get this straight, McDonald’s is accusing the meat packers of protecting their margins at the expense of both beef ranchers and consumers. In turn, McDonald’s has been placed in the position of having to raise their prices to cover the cost of those higher margins. Yet, the company’s CEO has not presented any plan to reduce prices for their products even if they should prevail in the lawsuit. I guess we will eventually get to the truth in these allegations. Anti-trust cases, however, are not known for their speedy adjudication. In the meantime, it looks like the real losers in this instance are beef producers and consumers. That said, beef producers have been the one bright light in agriculture for the past year or 18 months. Put beef producers at the top of your customer prospect list.