UPDATE: July 29, 2021: A federal grand jury handed up a new indictment charging four former and current Pilgrim's Pride executives with price fixing. These include Jason McGuire, former executive vice president of sales for prepared foods; Timothy Stiller, general manager of fresh food services and small bird debone; Wesley "Scott" Tucker, national accounts sales executive; and Justin Gay, director of fresh foodservice sales. The indictment says these men and co-conspirators worked together to suppress and eliminate competition for broiler chicken products. A grand jury also issued a superceding indictment in a separate and related case, charging poultry company Koch Foods with price fixing.
UPDATE: May 20, 2021: A federal grand jury in Denver, Colorado, returned an indictment charging Claxton Poultry Farms with participating in a nationwide conspiracy to fix prices and rig bids for broiler chicken products, the Justice Department said in a statement. According to court documents, from as early as 2012 until at least 2019, Claxton and co-conspirators, including current President Mikell Fries and current Vice President Scott Brady, engaged in the practice. Fries and Brady are among 10 individuals charged in a superseding indictment in October 2020.
- Six poultry industry officials were indicted Wednesday in a major price-fixing probe, according to court documents filed in a Colorado federal court. The indictment says the defendants engaged in a "conspiracy to suppress and eliminate competition by rigging bids and fixing prices" of broiler chicken products from at least 2012 to at least early 2019. They all face a conspiracy charge.
- Bill Lovette, former CEO at Pilgrim's Pride, is among those in the new indictment. Others indicted include Timothy Mulrenin, director of National Account Sales at Perdue Farms, but worked at Tyson during the majority of the time of the accusations; William Kantola, identified on LinkedIn as vice president of foodservice at Koch Foods; Gary Roberts, an employee at a chicken supplier headquartered in North Carolina and a manager of a chicken supplier based in Arkansas; Rickie Blake, listed on LinkedIn as director of national accounts at chicken producer George's; and Jimmie Little, who worked in sales at Pilgrim's Pride until 2017 per LinkedIn. Little is also charged with making false statements to federal law enforcement and obstruction of justice.
- This expands the number of executives investigators believe were involved in the scheme to 10. In June, a federal grand jury handed up an indictment with similar charges for Pilgrim's CEO Jayson Penn and former Pilgrim’s Vice President Roger Austin. The first indictment also charged Claxton's President Mikell Fries and Scott Brady, a vice president.
The new indictment shows a longer timeline for the purported price-fixing conspiracy in the chicken industry. The first indictment said it went until 2017, but this latest one says the conspiracy continued until early last year. The number of officials facing charges has also more than doubled, with 10 people in high-ranking positions at at least five major companies named in the indictment. If convicted of the conspiracy charge, each official faces up to 10 years in prison and up to a $1 million fine.
"Executives who choose collusion over competition will be held to account for schemes that cheat consumers and corrupt our competitive markets," Assistant Attorney General Makan Delrahim in the DOJ's Antitrust Division said in a statement.
The DOJ's investigation into the chicken industry was disclosed last year when it intervened in a price-fixing lawsuit filed in 2016. The class-action lawsuit accuses chicken producers — including Pilgrim's Pride, Perdue Farms, Tyson Foods and Sanderson Farms — of conspiring to inflate broiler chicken prices.
The intervention allowed federal attorneys to gather evidence and protect the grand jury probe. The DOJ subpoenaed Tyson, Pilgrim’s, Sanderson and other poultry producers, according to The Wall Street Journal. At the time, legal analysts told Food Dive the intervention could mean the government was on the brink of bringing criminal charges.
The latest indictment details correpondence through text messages and emails between the executives to support the charges of corroborating on prices. It also indicates dates, times and durations of telephone calls between in which prosecutors believe they discussed and furthered the conspiracy.
After the first indictment involving at Pilgrim’s and Claxton executives, Tyson Foods said it was cooperating with the investigation under the DOJ's Corporate Leniency Program. This program allows a company that comes forward to avoid criminal charges. Tyson's cooperation could be helping the department to take down more officials and expand the timeline for the price-fixing accusations.
The previous two CEOs at Pilgrim's Pride now face charges in this case. After Penn took a paid leave of absence to focus on his defense, Pilgrim's Pride permanently replaced him last month. His predecessor Lovette, who did not immediately respond to a request to comment, is now executive chairman of Sauer Brands as well as an advisor at Falfurrias Capital Partners. Disclosure: Falfurrias, the majority owner of Food Dive's publisher, Industry Dive, is also invested in Sauer Brands. Falfurrias has no influence over Food Dive's coverage.
Accusations of antitrust in the food industry have escalated in recent years and executives have increasingly been criminally charged. In June, former Bumble Bee Foods CEO Chris Lischewski was sentenced to more than three years in prison for conspiring to fix prices for canned tuna.
Legal analysts previously told Food Dive the DOJ’s antitrust division has focused on prosecuting executives because it is an effective deterrant. Under this strategy, these chicken executives could get serious jail time as well.