Anti-trust suit update: R-CALF suit, Sysco, more | TSLN.com
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Anti-trust suit update: R-CALF suit, Sysco, more

The news broke last week that Sysco Corp, a wholesale restaurant food distributor, has filed suit against the big four meat packers, claiming price fixing.

With a multitude of similar lawsuits filed in recent years, it is easy to gloss over the news of just “one more” lawsuit.

The independent cattlemen’s group R-CALF USA filed a lawsuit in 2019 alleging that the big four packers have unlawfully conspired to artificially depress cattle prices and simultaneously inflate beef prices.



At least five copycat lawsuits were filed after R-CALF’s lawsuit, said the group’s CEO Bill Bullard.

Bullard hasn’t yet read the Sysco lawsuit wording so he doesn’t know if that one is a “copycat” of the R-CALF suit, but several other suits have used nearly verbatim the evidence and research that R-CALF provided in its suit.



The R-CALF suit claimed that, beginning at least on Jan. 1, 2015, the big four packers were reducing slaughter volumes to ensure there was never any more demand than there was supply. “So they were managing demand based on supply. That’s the basis of our allegation,” said Bullard.

“Now after we filed our complaint, many other complaints were filed using the facts that we had laid out as the foundation of the case,” he said.

Those lawsuits include:

•direct purchasers of beef such as Sysco,

•consumers who allege the packers periodically reduced the volume of slaughter in order to inflate the price of beef,

•retailers

•other cattle producers

Meanwhile USDA says it is investigating the protocols of the big four and whether or not they are functioning legally and properly.

“So you could say that our case led the ongoing litigation and investigations into the dysfunctional cattle and beef markets,” said Bullard.

In comparison to the Pickett v. IBP case, the R-CALF USA case is broader. The Pickett case specifically litigated violations of the Packers and Stockyards Act, while the R-CALF suit alleges violations of anti-trust laws, the Packers and Stockyards Act and also the Commodity Exchange Act.

R-CALF’s original anti-trust suit was thrown out by the same Minnesota judge who will hear this case. The original suit was dismissed because the judge said factual details were lacking. R-CALF has since filed a new suit, providing what they believe to be sufficient facts to satisfy the court.

The case is currently in discovery. The next stage will be class certification which will determine whether the “classes” identified are appropriate. The suggested “classes” in the class action suit are: any producer who had sold cattle to the big four from Jan 1, 2015 until present, as well as all persons who have purchased options or contracts under the CME.

At this moment, R-CALF USA isn’t suing for a specific dollar amount, but “in our complaint we allege that our econometric analysis indicated that prices have been depressed by over seven percent as a result of the conspiracy from Jan. 1, 2015 until now,” said Bullard.

Several of the copycat lawsuits were combined with R-CALF’s suit, with R-CALF as the interim lead plaintiff, and their attorneys the interim lead counsel.

Some suits were filed in different circuits and are not as of yet combined with the R-CALF suit but eventually they could be, said Bullard.

Saskatchewan Stock Growers request meat pricing investigation

The Saskatchewan Stock Growers last week called for a federal investigation into meat pricing in their country. The group’s president, Garner Deobald of Hodgeville, SK, said that while the US deals with just four big packers, in Canada, just two packers control most of the meat processing.

“What we’re doing here is very similar to what’s going on in your country as well,” he said.

“There is a lot of concern (in the US) over the big four on beef pricing. Here in Canada, WE really only have two big players – JBS and Cargill,” he said.

His organization wants to see the results of a federal investigation so that they can decide if any corrective action should be taken.

As for the R-CALF lawsuit, Deobald is sympathetic. “I think they have a legitimate complaint. Litigation is probably warranted. I understand why it’s gotten to this. It doesn’t surprise me, the way things have evolved.”

Deobald, whose family raises commercial cattle and also registered Charolais cattle, said his group has seen mostly positive feedback from other industry groups following their request for an investigation.

“We haven’t had much negative feedback. Anyone who has been negative isn’t opposed to what we’re doing, but they feel like there isn’t really anything that can be done. It’s not that they oppose it, it’s because the outcome might not be productive.”

Deobald believes just starting the conversation is a good step forward. “Producers are the ones hurting right now and a lot of time the people consuming the product don’t understand the supply chain. By just talking about it – some good could come of it,” he said.

The Canadian Cattlemen’s Association will meet in August. While the Saskatchewan Stock Growers are not affiliated with the CCA, both groups represent many of the same type of producer, said Deobald, and he expects this topic to be a hot one at the upcoming meeting.

The Saskatchwan group at this time doesn’t have policy supporting any industry reforms such as cash trade requirements, more in depth reporting, etc. “That could be the next step after this investigation. If we had the hard data in hand to go back and ask for some of those things, it might work, but right now it would be premature to say we support this or that,” he said.

The federal government has not yet responded to the organization’s official request.

 


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