Tyson cleared in SEC chicken price-fixing investigation
- The Securities and Exchanges Commission won’t take any action against Tyson Foods after finishing its investigation centered on possible price fixing of broiler chickens, TheStreet reports.
- The original lawsuit was filed in September 2016 by Maplevale Farms, which claimed that 14 poultry businesses — including Tyson, Perdue Farms, Foster Farms, Sanderson Farms and Koch Foods — conspired for years to artificially raise chicken prices by sharing supply information via data company Agri-Stats. With that information, the lawsuit claimed the companies colluded to cut their supplies and manage production to manipulate prices.
- Tyson denied the accusations from the beginning. Tyson CEO Tom Hayes, who assumed the top post January 1, said the company viewed the case "as an attack on our integrity," according to Arkansas Business.
With Tyson now being cleared of any wrongdoing, the company has saved millions of dollars. Had the price-fixing accusations held up, it could have been financially disastrous. Not only would legal fees and fines have eaten away at company profits, but potentially plummeting stock prices could have cost investors and shareholders more than a pretty penny.
Last October, shortly after the class action lawsuit accusing Tyson and 13 competitors of price fixing was originally filed, equity research firm Pivotal Research downgraded Tyson’s stock to “sell” from “hold” and slashed its price target from $100 to $40 — certainly no small chunk of change for any shareholder to lose.
But perhaps more costly would have been the hit to Tyson’s corporate reputation. The company could have spent millions to unravel a public relations nightmare and regain consumer trust. Skeptical consumers could have easily shunned the chicken producer by shifting spending to other brands or alternative meat sources.
The Maplevale case isn’t the only time that Tyson has been accused of price fixing. Just last month, a judge in Arkansas dismissed another shareholders lawsuit that came from accusations of a massive price-fixing conspiracy involving several companies, according to Arkansas Business.
Issues surrounding the Georgia Dock Index haven’t helped matters either. Some experts previously questioned the Georgia Dock because it calculated a much higher price for chicken than similar methods. The benchmark was determined by companies — such as Tyson, Perdue Farms and others named in the lawsuit — self-reporting costs without independent third-party verification. Some claimed it could be used to inflate chicken prices. The U.S. Department of Agriculture subsequently dropped the Georgia Dock Index from its weekly meat pricing report in December.
The various lawsuits and pricing scandals have raised issues about how meat prices are set. It’s resulted in more scrutiny around chicken, meat and other commodity pricing, along with the implementation of increased monitoring — which is good for the food industry overall. But even moreso, it’s absolutely necessary to protect consumers and provide confidence in the brands they buy.
- TheStreet Tyson Foods Cleared by SEC in Pricing Investigation
- Financial Times Tyson Foods says SEC closes chicken-pricing investigation
- Arkansas Business Tyson Foods: SEC Ends Price-Fixing Look, Won't Discipline Company
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