The U.S. beef industry stands on the brink of a major reckoning, with suppliers alleging price-fixing collusion among the biggest beef companies in the nation. Beef processing in the United States currently operates under the monopoly of four major corporations: JBS, National Beef, Tyson, and Cargill. With beef only available to U.S. suppliers and purchasers from a small number of middlemen, this creates the opportunity for price-fixing, which is “when competitors conspire to artificially raise their prices above an ostensibly free market’s price point,” according to Top Class Actions.
A confidential supplier whistleblower helped kickstart several current lawsuits against the four corporations, but one lawyer explains that the noticeable price squeezes were already evident on both ends of the industry.
“Ranchers and people who raise cattle for beef have seen the prices paid for their product go down. But at the same time, people who shopped for beef at the grocery store, restaurants, and others who depend on buying beef for their businesses, have noticed price increases,” Omar Ochoa, lawyer and founder of Omar Ochoa Law Firm explains. “The squeeze on both sides is interesting because it means the beef processors – the ones in the middle who are buying the beef from the ranchers and selling them to the consumers — are making a larger profit due to these squeezes.”
Various parties have also noticed this pattern — from economists to consumer rights groups.
“This realization that the beef processors in the middle have been the main beneficiaries of these price squeezes has lead to these class action lawsuits,” Ochoa says. “That leads you to believe that it can’t be a product of the free market on its own. It is very likely a product of the beef process processors colluding with each other to put the squeeze on both sides.”
In 2019, the first class-action lawsuit from cattle suppliers was filed against the four major companies. Just last month, JBS agreed to pay a $52.5M settlement. While the move does not admit liability, it’s still an important development that may influence potential outcomes.
“JBS coming to the table early is a very significant decision,” Ochoa says. “It proves that there was in fact something going on amongst the largest beef producer processors in the world.”
The confirmation is important to the market and to consumer rights, Ochoa adds, highlighting that this may advance the other class-action lawsuits, too.
“The first defendant that comes to the table to do these icebreaker settlements, a lot of times cooperation will be involved in that settlement agreement as well.”
It means that attorneys involved in the lawsuits may now gain access to emails, document names, and employee interviews to gauge the extent of collusion and what exactly occurred.
Ochoa expects other parties to follow suit with one settlement agreement in the very early stages of these lawsuits.
“While it’s hard to say specifically what to expect,” he says, “I’m more than certain you’ll see another defendant settle within the next year. Another will probably soon follow after that, and you’ll get to a point where you’ll have some holdouts. Because if you’re the last defendant standing, you have a significant weight on you about what the plaintiffs generally are willing to settle for.”
He adds that while we will likely see another defendant settle in the relatively short term, it wouldn’t be unusual for the last defendant to take a few years to resolve.
Ochoa, who has extensive experience working on class action lawsuits, explains that these cases are essential in protecting wider consumer rights.
“Any individual plaintiff — and this specific class action is pointed towards the consumers — may have several thousand or a couple hundred thousand dollars in damages. On its own, it wouldn’t send the type of signal to the beef industry that they need to stop what they’re doing,” he explains. “But once you’re able to aggregate all of the people harmed by this price-fixing, it makes it very obvious that the beef processors have to change their practices, not just to settle this lawsuit, but moving forward to open up their markets. And that’s really only possible with a class action lawsuit like this. It’s a vital tool to protect consumer rights.”