May 5, 2020 at 6:17 PM EDT – Updated May 5 at 6:17 PM
BELLE PLAINE, Kan. (AP) — The attorneys general for 11 Midwestern states urged the Justice Department on Tuesday to pursue a federal investigation into market concentration and potential price fixing by meatpackers in the cattle industry during the coronavirus pandemic.
In a letter to U.S. Attorney General William Barr, the state attorneys general noted that the domestic beef processing market is highly concentrated, with the four largest beef processors controlling 80 percent of the industry.
“Given the concentrated market structure of the beef industry, it may be particularly susceptible to market manipulation, particularly during times of food insecurity, such as the current COVID-19 crisis,” they wrote.
Although their letter does not name them, the nation’s largest processors are Tyson Foods, JBS, Cargill, and National Beef. The companies did not immediately respond to emails seeking comment.
Mark Watne, the president of the North Dakota Farmers Union, said in a statement that in all the years they have called for stronger antitrust enforcement, they have rarely seen such obvious market abuses by the meatpacking industry.
“They’re posting record profits, while ranchers are suffering significant market price losses,” Watne said. “The situation definitely smells rotten, and it not only hurts ranchers, but consumers, too.”
The state officials criticized the disparity in the price of live cattle and the retail cost of boxed beef that is sold to consumers, arguing that it shows the market lacks fair competition. Live cattle futures recently hit 18-year lows, while both the price of boxed beef and consumer demand remain healthy as consumers stockpile meat in response to the COVID-19 pandemic.
The letter was signed by attorneys general in North Dakota, Missouri, Colorado, South Dakota, Montana, Arizona, Idaho, Iowa, Minnesota, Nebraska and Wyoming.
The Justice Department did not immediately respond to an email seeking comment.
The state attorneys general said they are eager to work with Barr on an examination of the competitive dynamics of the industry.
“Antitrust concerns about the cattle market are nothing new. Competition issues arising from agricultural markets existed long before the COVID-19 pandemic and will persist long after we defeat our current crisis,” they wrote.
Although most enforcement actions are civil, federal antitrust law is also criminal law and individuals and businesses that violate it may be prosecuted by the Justice Department, according the Federal Trade Commission.
Criminal penalties can reach up to $100 million for a corporation, along with up to 10 years in prison. The maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million.
The state attorneys general wrote that if, after an investigation, there is no appropriate enforcement action that can be pursued, regulatory strategies should be explored to promote competition and protect consumers.
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