WHEAT RIDGE, Colo. -- The chief executive officer of Pilgrim's Pride is one of four current and former chicken company executives indicted Wednesday on charges of price-fixing.
The U.S. Department of Justice said a federal grand jury in Colorado found that executives from Greeley, Colo.-based Pilgrim's Pride and Claxton, Ga.-based Claxton Poultry Farms conspired to fix prices and rig bids for broiler chickens from at least 2012-17.
Pilgrim's Pride President and CEO Jayson Penn was charged, along with former Pilgrim's Pride Vice President Roger Austin. Claxton Poultry President Mikell Fries and Vice President Scott Brady also were charged.
All four men are scheduled to appear before a magistrate judge in Denver federal court this afternoon, according to court documents.
The Associated Press left phone and email messages seeking comment with Pilgrim's Pride and an attorney for Claxton Poultry.
"This is clearly negative for our covered broiler processing companies and particularly negative for PPC," said Ben Bienvenu, an analyst at Stephens Inc., which lowered its rating on Pilgrim's Pride.
The charges were the first in a long-running investigation into price-fixing in the chicken industry. Broiler chickens are chickens raised for human consumption, and sold to grocery stores and restaurants.
According to prosecutors, the men communicated about their prices and negotiated to try to fix, stabilize and raise prices. The indictment cites a number of reported phone calls and text exchanges among them.
The indictment says that in one text exchange, Brady told Fries on Nov. 13, 2012, that he had talked to Austin and found out that Pilgrim's Pride was 3 cents higher on an eight-piece bone-in broiler chicken. Brady said Austin wanted Claxton to raise its prices.
"Tell him we are trying!" Brady responded, according to the indictment.
Pilgrim's Pride is a division of JBS USA, the U.S. subsidiary of Brazilian meat production company JBS SA. Pilgrim's Pride has more than 54,000 employees and 36 production facilities in the U.S. and abroad. The company says it processes one of every five chickens in the U.S. Claxton Poultry has 2,000 employees and supplies 300 million pounds of chicken per year to customers including Chick-fil-A.
The Justice Department indicated that the investigation was ongoing last summer when it asked for a temporary pause in discovery proceedings in a separate lawsuit accusing Pilgrim's Pride, Tyson Foods, Sanderson Farms Inc. and others of fixing poultry prices. At the time, the Justice Department said it wanted to protect an ongoing grand jury investigation.
That suit, filed by New York-based Maplevale Farms, said companies shared information through a third-party data firm and restricted supply by destroying breeder hens on several occasions.
The case is one of nearly 40 filed by grocers, restaurants and others against the poultry companies. Kroger, Walmart, the Hooters chain and Darden Restaurants -- which owns Olive Garden -- are among those who have sued.
The FBI and the Department of Commerce assisted in the investigation, the Justice Department said.
"Particularly in times of global crisis, the [Justice Department's antitrust] division remains committed to prosecuting crimes intended to raise the prices Americans pay for food," Assistant Attorney General Makan Delrahim said in a statement. "Executives who cheat American consumers, restaurateurs and grocers, and compromise the integrity of our food supply, will be held responsible for their actions."
The executives each face up to 10 years in prison and a $1 million fine.
It's rare for the CEO of a company the size of Pilgrim's Pride to be indicted by federal prosecutors. Penn is the most-high-profile executive to be charged by the department's antitrust division since Chesapeake Energy Corp. co-founder Aubrey McClendon, who was later killed in a car crash.
Pilgrim's Pride shares fell 12.4% on the news Wednesday. Tyson sank 3.8% and Sanderson Farms slid 6%.
Information for this article was contributed by Dee-Ann Durbin and Colleen Slevin of The Associated Press; and by David McLaughlin of Bloomberg News.
Business on 06/04/2020
Print Headline: 4 poultry industry officials indicted