In May, as McDonald’s continued to swat down lingering rumors that the chain was asking an exorbitant $18 for a Big Mac meal at locations across the country, company president Joe Erlinger wrote an open letter to Golden Arches customers, attempting to explain the inflationary pressures contributing to increased prices. He cited rising labor, food and paper costs among the factors affecting the price diners paid for their burgers, fries and sodas.
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Erlinger denied that McDonald’s price hikes were double or triple the rate of inflation. But he acknowledged that, from 2019 to 2024, the average price of McDonald’s menu items had gone up 40 percent.
What the executive didn’t mention — but was painstakingly detailed in a lawsuit filed Oct. 4 in a New York federal court — was the company’s allegation that the world’s largest meat processors have been conspiring since at least 2015 to limit beef supplies, leading to elevated prices for the meat they’ve sold to McDonald’s and others.
“The goal of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold to Plaintiff and others at supra-competitive levels — that is, prices artificially higher than beef prices would have been in the absence of their conspiracy,” McDonald’s attorneys allege in their complaint. The lawsuit names Tyson Foods, Cargill, JBS and National Beef Packing as defendants. Collectively, these companies control 82 percent of the beef market, according to a 2021 brief from the National Economic Council.
McDonald’s is just the latest plaintiff to accuse the big four meatpackers of violating the Sherman Antitrust Act. Ranchers, cattle sellers, consumers and beef buyers have also sued Tyson, Cargill, JBS and National Beef over similar allegations. The complaints have been consolidated in Minnesota federal court.
Tyson, Cargill, National Beef and JBS did not immediately respond to requests for comment from The Washington Post. But the companies have denied the allegations in other cases. McDonald’s also did not respond to a request for comment.
In 2022, JBS agreed to a $52.5 million settlement in one claim against it from direct purchasers. Last year, U.S. District Judge John R. Tunheim dismissed a case brought by ranchers who claimed they had been harmed by the meatpackers’ alleged practices, even though the ranchers had not sold cattle directly to the companies.
The meatpackers’ alleged conduct has drawn scrutiny outside the courthouse, too. In 2020, the Justice Department reportedly sent subpoenas to the four meatpackers in an antitrust probe. A year later, nearly 30 members of Congress sent the Justice Department a letter, suggesting it was time for government “to determine whether the stranglehold large meatpackers have over the beef processing market violate our antitrust laws and principles of fair competition.”
“In the last several years, the price of live cattle in the United States market has plummeted, while the price of boxed beef has significantly increased, raising consumer prices at the grocery store. Concurrently, the major packing companies realized significant profits, while both U.S. beef consumers and independent cattle producers paid the price,” the lawmakers wrote. “These large price disparities are leading independent cattle producers to go broke and causing consumers to pay an unnecessary, over-inflated premium on beef.”
In its complaint, McDonald’s alleges that the price per hundred pounds of cattle had historically stayed within $20 to $40 of the average price per hundred pounds of wholesale beef. But that correlation started to change dramatically around 2015, the suit alleges: By 2021, the difference had ballooned to $156.50. The latest data from the U.S. Department of Agriculture supports the 2021 farm-to-wholesale price spread.
By “the end of 2021, the two largest Defendants, Tyson Foods and JBS USA, were reporting record margins or net revenue in their beef business,” McDonald’s alleges in the complaint.
In December, Target, BJ.s Wholesale Club, Gordon Food Service and Glazier Foods also filed antitrust suits against the big four meatpackers, relying on the same New York law firm that brought the McDonald’s lawsuit.
https://www.washingtonpost.com/food/2024/10/08/mcdonalds-beef-lawsuit-price-fixing/
Get the Eat Voraciously newsletter for delicious dinner inspiration, delivered straight to your inbox.
Erlinger denied that McDonald’s price hikes were double or triple the rate of inflation. But he acknowledged that, from 2019 to 2024, the average price of McDonald’s menu items had gone up 40 percent.
What the executive didn’t mention — but was painstakingly detailed in a lawsuit filed Oct. 4 in a New York federal court — was the company’s allegation that the world’s largest meat processors have been conspiring since at least 2015 to limit beef supplies, leading to elevated prices for the meat they’ve sold to McDonald’s and others.
“The goal of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold to Plaintiff and others at supra-competitive levels — that is, prices artificially higher than beef prices would have been in the absence of their conspiracy,” McDonald’s attorneys allege in their complaint. The lawsuit names Tyson Foods, Cargill, JBS and National Beef Packing as defendants. Collectively, these companies control 82 percent of the beef market, according to a 2021 brief from the National Economic Council.
McDonald’s is just the latest plaintiff to accuse the big four meatpackers of violating the Sherman Antitrust Act. Ranchers, cattle sellers, consumers and beef buyers have also sued Tyson, Cargill, JBS and National Beef over similar allegations. The complaints have been consolidated in Minnesota federal court.
Tyson, Cargill, National Beef and JBS did not immediately respond to requests for comment from The Washington Post. But the companies have denied the allegations in other cases. McDonald’s also did not respond to a request for comment.
In 2022, JBS agreed to a $52.5 million settlement in one claim against it from direct purchasers. Last year, U.S. District Judge John R. Tunheim dismissed a case brought by ranchers who claimed they had been harmed by the meatpackers’ alleged practices, even though the ranchers had not sold cattle directly to the companies.
The meatpackers’ alleged conduct has drawn scrutiny outside the courthouse, too. In 2020, the Justice Department reportedly sent subpoenas to the four meatpackers in an antitrust probe. A year later, nearly 30 members of Congress sent the Justice Department a letter, suggesting it was time for government “to determine whether the stranglehold large meatpackers have over the beef processing market violate our antitrust laws and principles of fair competition.”
“In the last several years, the price of live cattle in the United States market has plummeted, while the price of boxed beef has significantly increased, raising consumer prices at the grocery store. Concurrently, the major packing companies realized significant profits, while both U.S. beef consumers and independent cattle producers paid the price,” the lawmakers wrote. “These large price disparities are leading independent cattle producers to go broke and causing consumers to pay an unnecessary, over-inflated premium on beef.”
In its complaint, McDonald’s alleges that the price per hundred pounds of cattle had historically stayed within $20 to $40 of the average price per hundred pounds of wholesale beef. But that correlation started to change dramatically around 2015, the suit alleges: By 2021, the difference had ballooned to $156.50. The latest data from the U.S. Department of Agriculture supports the 2021 farm-to-wholesale price spread.
By “the end of 2021, the two largest Defendants, Tyson Foods and JBS USA, were reporting record margins or net revenue in their beef business,” McDonald’s alleges in the complaint.
In December, Target, BJ.s Wholesale Club, Gordon Food Service and Glazier Foods also filed antitrust suits against the big four meatpackers, relying on the same New York law firm that brought the McDonald’s lawsuit.
https://www.washingtonpost.com/food/2024/10/08/mcdonalds-beef-lawsuit-price-fixing/
