WASHINGTON — Three of the largest poultry companies in the United States were named in a civil antitrust lawsuit from the US Department of Justice over an ongoing case alleging wage suppression of workers.
The proposed consent decree from Cargill Inc., Sanderson Farms Inc. and Wayne Farms LLC would call for the poultry processors to pay $84.8 million in restitution to workers effected in the alleged conspiracy.
The decree would also prohibit the three poultry companies from sharing competitively sensitive information about workers’ compensation. Weber, Meng, Shal and Co., (WMS) a data consulting company, were also named in the case.
In its lawsuit, the DOJ said two of the poultry processors violated the Packers and Stockyards Act by engaging in deceptive practices associated with the “tournament system,” which pits chicken growers against each other to determine compensation.
“Through a brazen scheme to exchange wage and benefit information, these poultry processors stifled competition and harmed a generation of plant workers who face demanding and sometimes dangerous conditions to earn a living,” said Doha Mekki, principal deputy assistant attorney at the DOJ’s Antitrust Division. “Today’s action puts companies and individuals on notice: the Antitrust Division will use all of its available legal authorities to address anticompetitive conduct that harms consumers, workers, farmers and other American producers.”
On July 22, a joint venture between Continental Grain Co., of which Wayne Farms is a subsidiary, and Cargill finalized the acquisition of Sanderson Farms, Inc. for $4.5 billion and at $203 per share.
Cargill provided comments on the acquisition and the decree to MEAT+POULTRY.
“The merits of this deal outweigh the potential costs of prolonged litigation and any further distraction to our collective efforts to feed communities across the US which is why we’ve agreed to a $15 million settlement of a lawsuit which alleges wage suppression by US turkey and poultry producers to help facilitate its forward movement,” said Daniel Sullivan, a Cargill spokesperson. “Cargill conducts business in a legal, ethical and responsible manner. We believe the alleged claims lack merit and do not show a conspiracy to fix wages, nor do they show any improper actions by Cargill or its employees.”
The company noted that the settlement was not an admission of guilt and Cargill denies any wrongdoing.
Wayne Farms officials also addressed the lawsuit.
“While we are pleased to have resolved this matter and put it behind us, both legacy companies are proud of their track record with their employees and growers and the agreement with DOJ evidences our commitment to continue to be an industry leader in those areas,” the poultry processor said in a statement. “As we proceed with the integration of Wayne-Sanderson Farms, we look forward to investing in our communities, employees and grower partners to ensure there continues to be a strong and competitive American food supply.”
If the consent decree is approved by the court WMS would be banned from providing surveys that facilitate the sharing of competitively sensitive information in any industry. Jonathan Meng, president of WMS, would also have to follow the consent decree.
Other parts of the document include a court-appointed compliance monitor for the next decade.
The DOJ stated that the monitor would have broad authority for compliance with all federal antitrust laws related to poultry processing facilities, workers at their poultry processing plants, chicken growers, integrated poultry feed, hatcheries, transportation of poultry and poultry products and the sale of poultry.
The monitor can submit regular reports on the poultry processors and permit the antitrust division to inspect the processors’ facilities and interview their employees to ensure compliance with the consent decree.
These terms would expire 10 years after the court approves the consent decree.
“Additionally, the proposed consent decree with Sanderson Farms and Wayne Farms would resolve alleged violations of the Packers and Stockyards Act, which prohibits, among other things, deceptive practices in poultry markets,” the DOJ said.
Other items on the proposed consent decree include preventing Sanderson Farms and Wayne Farms from penalizing chicken growers by reducing their base payments due to relative performance, while still allowing incentives, bonuses and other types of income to growers.
It also required expanded information disclosures in grower contracts, consistent with proposed transparency rules from the USDA.
The decree would prohibit retaliation against growers who raised antitrust concerns with the compliance monitor.