UPDATE: June 30, 2021: Smithfield Foods will pay $83 million to settle litigation that accused several companies of conspiring to inflate prices and boost profits by limiting the supply of pork, according to Reuters. Keira Lombardo, Smithfield’s chief administrative officer, told the wire service the settlement eliminates a "substantial portion" of its exposure in the litigation and that the meat supplier denied liability in agreeing to settle.
UPDATE: April 20, 2021: JBS will pay $12.75 million to resolve a proposed pork price-fixing class action led by restaurants and retailers, according to Bloomberg. With the agreement, the wire service said the meat processor will exit its antitrust case following prior settlements with wholesalers and consumers totaling $45 million.
UPDATE: March 30, 2021: Court documents revealed JBS will pay $20 million to resolve consumer antitrust claims for damages in the price-fixing class action suit involving pork, according to Meat + Poultry. The deal does not cover claims made against JBS by seven other plaintiffs who did not sign on to the settlement.
UPDATE: Dec. 3, 2020: Court documents revealed JBS will pay $24.5 million to compensate direct purchasers for damages in the price-fixing class action suit. JBS also will cooperate against other large pork processors, such as Tyson Foods and Hormel Foods, according to the motion reported by Bloomberg Law.
- JBS reached a settlement agreement in a lawsuit that accuses the company of fixing pork prices for direct purchasers by conspiring with other meat processors, Meat + Poultry reported. This settlement does not resolve the consumer or retailer class action claims that are consolidated in the lawsuit.
- Terms of the settlement were not disclosed and are still pending court approval. In a statement, JBS USA denied wrongdoing and said they "believed a settlement was in the best interests of the company.”
- Antitrust litigation in the food industry has escalated in recent years. Some executives have been sentenced to prison time after being found guilty of conspiring to fix prices. Companies have also incurred large fines.
By arriving at this settlement, the world’s largest meat producer is looking to wipe the slate clean and extract itself from litigation in which it has been embroiled for years.
Many meat companies have been accused of collusion, and now the government is working to hold both companies and individuals who they believe authorized price-fixing schemes accountable. In recent years, the U.S. Department of Justice, the U.S. Department of Agriculture and attorneys representing groups of consumers or business customers have brought cases against beef, dairy, tuna and chicken producers.
Pork producers have not been immune to these pressures and several, including JBS, have faced ongoing lawsuits accusing them of artificially raising prices. Last year, a federal judge dismissed a class action lawsuit that accused several pork producers — including Hormel, JBS USA, Smithfield and Tyson — of working together to raise prices. The case was dismissed because the judge ruled the plaintiffs did not provide enough evidence of what each defendant did to further a conspiracy. The court allowed the plaintiffs to amend their complaints, and they did in January. The amended complaints survived several motions to dismiss, the judge ruled last month.
The action taken by JBS USA by itself in this lawsuit allows the company to skirt repercussions that other defendants may face. Rather than arguing in court openly about actions that may be seen as violating antitrust laws, JBS elected to settle behind closed doors and avoid a potential guilty verdict. Even without publicly admitting to anything, the company will likely have to pay a hefty sum, which could be a severe punishment during the pandemic, since revenue has suffered following plant closures. But settling this price-fixing case could reduce some of the gray clouds lingering over the company.
This lawsuit is only one of the legal battles the company is fighting in the United States. JBS SA, the parent company of JBS USA, is the majority owner of Pilgrim’s Pride. The chicken company made a plea deal and agreed to pay a $110.5 million fine for anti-competitive behavior last month as part of a U.S. Justice Department investigation into price fixing in broiler chicken sales. JBS SA was also subpoenaed for more information on its beef division. This followed accusations of anti-competitive behavior after retail beef prices that rose as shoppers hoarded supplies during the pandemic did not translate to higher profits to farmers.
In addition to these legal issues, JBS USA, which produces about a fifth of the country’s pork, has worked to get production back up to capacity after shutdowns during the pandemic.
Amid this tumultuous environment, JBS SA has said it is looking to go public in the U.S. sometime in 2021. While the company has repeatedly announced plans to IPO, it has withdrawn those efforts on numerous occasions. But listing itself on the stock exchange has the potential to raise substantial cash for the company, which it could then use to both scale and position itself on stable financial ground following the blows dealt by the pandemic and continued lawsuits.