The chief executive of one of the country’s biggest chicken producers and three other industry executives were indicted Wednesday on charges they conspired to fix prices on chicken sold to restaurants and grocery stores, the Justice Department’s first charges in a continuing criminal antitrust probe.
Pilgrim’s Pride Corp. CEO Jayson Penn and a former company vice president, Roger Austin, were charged in the one-count indictment, returned by a federal grand jury in Denver. Colorado-based Pilgrim’s, majority owned by Brazilian meat conglomerate JBS SA, is the nation’s second-largest chicken producer. Also charged were the president of Georgia-based Claxton Poultry Farms, Mikell Fries, and a vice president, Scott Brady.
The indictment, filled with alleged instances of cozy discussions about pricing and text messages about holding the line on bids to customers, charged the executives with colluding to fix prices and rig bids from 2012 to 2017. The charges also referenced other unnamed executives and chicken suppliers and suggested the sharing of pricing information extended beyond the alleged discussions between Pilgrim’s and Claxton. Neither Pilgrim’s nor Messrs. Penn and Austin responded to requests for comment. A Claxton spokesman declined to comment. The companies have previously denied allegations of coordinating prices.
The charges sent share prices across the $65 billion chicken industry sharply lower. Pilgrim’s dropped 12%, and shares of chicken companies Tyson Foods Inc. and Sanderson Farms Inc. fell 3.8% and 6.2%, respectively. The indictments come amid growing concern among farmers, grocery stores and restaurants that declining competition among a smaller number of big meatpackers is pushing up meat prices for consumers while reducing farmers’ and ranchers’ income. Some of the country’s biggest grocery chains, including Walmart Inc., Kroger Co. and Albertsons Cos., sued chicken companies last year, alleging anticompetitive practices. “Executives who cheat American consumers, restaurateurs and grocers, and compromise the integrity of our food supply, will be held responsible for their actions,” U.S. Assistant Attorney General Makan Delrahim, the Justice Department’s antitrust chief, said.
The Justice Department said its efforts in the probe are continuing.
The indictment painted a picture of rival executives who kept close contact and weren’t shy about sharing—and coordinating—pricing strategies in bids to chicken buyers. When a restaurant chain in late 2012 was soliciting bids for dark meat for the coming year, Mr. Austin, then working for Pilgrim’s, called Claxton’s Mr. Brady, himself a former Pilgrim’s employee, after both companies had submitted bids, according to the indictment. After the call, the Justice Department alleged, Mr. Brady told Claxton’s Mr. Fries that Mr. Austin had urged Claxton to raise its prices. “Tell him we are trying!” Mr. Fries said in a text message, according to the complaint. Mr. Brady responded, “Will do.”
Pilgrim’s and Claxton that December both signed supply deals with the buyer, at or near the prices that Messrs. Austin and Brady had discussed, the Justice Department said. While negotiating chicken prices with a purchasing cooperative in August 2014, Pilgrim’s Mr. Austin and Claxton’s Mr. Brady again talked about holding firm on prices, the indictment alleged, and both companies signed deals with the customer.