Pilgrim’s to pay $110.5 million to resolve DOJ antitrust probe

Pilgrim's Pride Corp. announced a plea agreement with the U.S. Department of Justice just days after the government revealed several more individuals have been charged in an alleged conspiracy to fix prices and rig bids for broiler chicken products.

Josh Long, Associate editorial director, Natural Products Insider

October 22, 2020

2 Min Read
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Pilgrim’s Pride Corp. has entered a plea agreement with the U.S. Department of Justice (DOJ) related to an ongoing government antitrust probe into the sale of broiler chicken products.

Under the agreement, which Pilgrim’s announced Oct. 13, the company agreed to plead guilty to one count of conspiracy in restraint of competition involving sales of broiler chicken products in violation of the Sherman Antitrust Act and pay a fine of $110.5 million.

In a regulatory filing, the Greeley, Colorado-based company said it continues to cooperate with DOJ’s Antitrust Division in its probe of broiler chicken products in the United States.

The agreement was announced just days after DOJ revealed several more individuals have been charged in an alleged conspiracy to fix prices and rig bids for broiler chicken products, which are sold to grocers and restaurants. People charged in a superseding indictment work or worked for Case Farms, George’s Inc., Koch Foods Inc., Perdue Farms Inc., Pilgrim’s and Tyson Foods Inc., The Wall Street Journal reported.

Among those indicted: Pilgrim’s former CEO, Jayson Penn, and two other former employees of the company. Penn pleaded not guilty to charges of conspiracy to suppress and eliminate competition, according to Pilgrim’s in a regulatory filing. In September, the company fired Penn and promoted Fabio Sandri to the full-time CEO position after he began serving as interim leader in mid-June when Penn was granted a leave of absence, the Greeley Tribune reported.

Pilgrim’s disclosed it agreed to pay the $110.5 million fine for restraint of competition that affected three contracts for the sale of chicken products to one U.S. customer. The Antitrust Division has agreed not to bring further charges against Pilgrim’s in the matter, provided the company adheres to the terms of the plea agreement.

While the fine is sizable, Pilgrim’s in 2019 reported net income of $455.9 million, or $1.83 per diluted common share, on net sales of $11.4 billion.

“Pilgrim’s is committed to fair and honest competition in compliance with U.S. antitrust laws,” Sandri said in an Oct. 13 statement. “We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s, providing certainty regarding this matter to our team members, suppliers, customers and shareholders.”

The company also is defending itself against putative class action lawsuits that allege violations of state and federal antitrust and unfair competition laws. According to filings with the Securities and Exchange Commission, between Sept. 2, 2016 and Oct. 13, 2016, a series of lawsuits were filed in Illinois against Pilgrim’s and 13 other producers by and on behalf of purchasers of broiler chickens. The lawsuits, styled as In re Broiler Chicken Antitrust Litigation, Case No. 1:16-cv-08637, are pending in the U.S. District Court of the Northern District of Illinois.

About the Author(s)

Josh Long

Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition

Josh Long has been a journalist since 1997, holds a J.D. from the University of Wyoming College of Law, and was admitted to practice law in Colorado in 2008. Josh is the legal and regulatory editor with Informa's Health and Nutrition Network, specializing on matters related to Natural Products Insider. Ping him with story ideas at [email protected].

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