GREELEY, Colo. – A federal appeals court overturned a $25 million damages award against Pilgrim's Pride Corp.

A panel of the 5th US Circuit Court of Appeals in New Orleans found that the company's decision to close a poultry-processing plant in El Dorado, Ark. in May 2009 and end agreements with contract growers was not an attempt to control poultry prices. The two-judge panel said Pilgrim's decision "was neither illegitimate nor anti-competitive..."

Several contract poultry growers in the El Dorado area sued Pilgrim's, alleging the company violated antitrust law by trying to manipulate poultry prices. A magistrate judge awarded 91 growers $25 million in damages in September 2011.

"The growers’ alleged injury to competition stems entirely from PPC’s alleged intent to influence prices," the justices wrote. "However, we remain conscious of the fact that laws against anti-competitive conduct seek to protect competition, not low prices. Competition, of course, is merely the existence of genuine commercial rivalry. While we agree that a goal of competition is lower price levels, a unilateral attempt to raise prices, without more, is not inherently illicit or anticompetitive."

The court also said the Pilgrim's "wisely decided to stop flooding the market with unprofitable chicken," and that the court could find no case law stating such conduct to be unfair, illegal or harmful to competition.
"Far from being a nefarious goal, higher prices are the natural consequence of a reduction in supply," the panel wrote. "If it is lawful for a business to independently control its own output, then it is also lawful for the business to hope for the natural consequences of its actions."

Greeley, Colo.-based Pilgrim's is a subsidiary of JBS S.A. in Sáo Paulo, Brazil.

The case is Pilgrim's Pride Corp v. Agerton et al, 5th U.S. Circuit Court of Appeals, No. 12-40085.