Ruffled Feathers: The Chicken Cartel in the United States

• DOI: http://doi.org/10.1177/0003603X221149333
• Published date: 01 March 2023
• Date: 01 March 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221149333

The Antitrust Bulletin

2023, Vol. 68(1) 47 –72

© The Author(s) 2023

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0003603X221149333

journals.sagepub.com/home/abx

Article

Ruffled Feathers: The Chicken

Cartel in the United States

Dong Li* and Dennis L. Weisman**

Abstract

Allegations of price-fixing by U.S. chicken suppliers in violation of Section 1 of the Sherman Act date

back more than a half-century. The methods to facilitate this collusion have evolved over time from

conference calls arranged by the National Broiler Marketing Association to more sophisticated methods

of information sharing. Amid the highest rate of inflation in nearly forty years and persistent supply-chain

bottlenecks as the country emerges from the pandemic, the chicken industry has been singled out by

government officials for monopolistic pricing behavior. We examine the mechanism through which the

“chicken cartel” was formed and sustained and its harmful effects on consumers. The analysis indicates

that as early as 2008 a plan was hatched by U.S. chicken suppliers to collude in fixing the price of chicken.

According to one complaint, this collusion, in concert with increased market concentration, raised

chicken prices by approximately 50 percent. The associated consumer surplus losses are estimated at

$8 to $10 billion annually with cumulative losses over the duration of the cartel ranging upward of $100

billion. Numerous indictments have been handed down and settlements reached, both civil and criminal.

Keywords

price-fixing, cartel, chicken, antitrust, damages, broilers

I. Introduction

Amid the worldwide Covid-19 Pandemic and persistent supply-chain bottlenecks, the United States

has experienced the highest rate of retail price inflation in nearly forty years. The chicken industry has

frequently been singled out in the media as a market that has experienced both rapidly rising prices and

deep, prolonged supply shortages. Whereas the pandemic has certainly contributed to these market

upheavals, the origins of these price spikes are more sinister in nature and began a decade or more

before the term Covid-19 entered the vernacular.

*Professor, Economics Program, The University of Texas at Dallas, Richardson, TX, USA

**Professor Emeritus, Department of Economics, Kansas State University, Manhattan, KS, USA

Corresponding Author:

Dong Li, Professor, Economics Program, The University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX 75080-

3021, USA.

Email: econdongli@utdallas.edu

1149333ABXXXX10.1177/0003603X221149333The Antitrust BulletinLi and Weisman

research-article2023

48 The Antitrust Bulletin 68(1)

The White House has cast blame on poultry (and meat) suppliers for these pricing and supply

problems.1 Specifically, there is substantial evidence, anecdotal and otherwise, to suggest that collu-

sion among industry participants along with increased market concentration is responsible for higher

chicken prices and profitability. For example, as reported in the consolidated class action complaint,

“by May 28, 2009, Sanderson Farms reported strong profits that were twice the estimates of Wall

Street analysts, which according to one industry publication was ‘aided by production cuts and lower

feed costs that offset still-weak demand.’”2

There are three prominent antitrust issues of concern in the U.S. chicken industry. The first is that of

collusive agreements that precipitated price-fixing in the output market. The second is industry consoli-

dation that facilitates the exercise of market power in the output market.3 The third is the exercise of

monopsony power that reduced wages and compensation for chicken growers.4

The primary objective of this analysis is to examine price-fixing in the output market for broiler

chickens. A secondary objective is to examine the effect of increasing market concentration on prices.

These two factors are interrelated since the likelihood of successful collusion generally increases with

the fewness of suppliers. This collusion resulted in significant harm to consumers given the size and

scope of the market. The U.S. chicken market was valued at $41 billion in 2016. Annual wholesale

revenue represents approximately $30 billion of this total. Broiler chickens constitute approximately

98 percent of all chicken meat sold in the United States.5

We examine the mechanism through which the “chicken cartel” was formed and sustained and its

harmful effects on consumers. The analysis indicates that a concerted effort began as early as 2008 by

U.S. chicken suppliers to collude in fixing the price of chicken. According to one complaint, this col-

lusion in concert with increased market concentration is estimated to have raised chicken prices by

approximately 50 percent.6 The associated consumer surplus losses are estimated at $8 to $10 billion

annually with cumulative losses over the duration of the cartel ranging upwards of $100 billion.7

This illicit behavior has resulted in numerous indictments handed down and settlements reached, both

civil and criminal. Some chicken executives could face prison time.8

1. Kasia Klimasinska, Big Meat Processors Use Power to Boost Prices: White House, BloomBerg News (Dec. 10, 2021),

https://news.bloomberglaw.com/international-trade/big-meat-processors-use-power-to-boost-prices-white-house?context

=article-related. In December 2021, a bipartisan group of fifteen state attorneys general wrote to Secretary of Agriculture

Tom Vilsack urging him to use his powers under the Packers and Stockyard Act to counter rapidly increased concentration

among meat processors, https://www.theantitrustattorney.com/state-and-federal-enforcers-pull-out-all-the-stops-to-target-

meat-and-poultry-in-2022/.

2. In Re Broiler Chicken Antitrust Litig., N.D. Ill. E.D., 16-cv-8637. Filed Jan. 29, 2021. Hereinafter Complaint, at ¶448.

3. According to the National Chicken Council, between 1995 and 2014 there was a 36 percent reduction in the number of

federally inspected broiler companies.

4. The U.S. Department of Justice recently announced that it was launching a probe into chicken industry labor practices. See

Michael Hirtzer and David McLaughlin, U.S. Opens Antitrust Probe on Chicken-Industry Labor Practices, BloomBerg

News (Mar. 4, 2022), https://news.bloomberglaw.com/us-law-week/u-s-opens-antitrust-probe-on-chicken-industry-labor-

practices. See also Brianna L. Alderman, Meatpackers Feed on Fed Cattle, 68 ANtitrust Bull. (forthcoming 2023), and

Roger D. Blair, The Consumer’s Beef About Beef Prices, 68 ANtitrust Bull. (forthcoming 2023).

5. The following URL shows per-capita consumption of beef, chicken, pork, turkey, and commercial fish and shellfish.

National Chicken Council Per Capita Consumption of Poultry and Livestock, 1965 to Forecast 2022, in Pounds, https://

www.nationalchickencouncil.org/about-the-industry/statistics/per-capita-consumption-of-poultry-and-livestock-1965-to-

estimated-2012-in-pounds/.

6. Maplevale Farms, Inc. v. Koch Foods, Inc. et al., N.D. Ill., 16-cv-8637, filed Sept. 2, 2016. The price increase is estimated

at 30 percent according to a news report. https://www.nytimes.com/2021/08/17/opinion/antitrust-big-tech.html.

7. This increased market concentration attracted the attention of antitrust authorities. In 2010, the United States Department

of Justice, Antitrust Division, convened a series of public workshops to examine these issues and their implications for the

future of competition in the industry. Public Workshops: Agriculture and Antitrust Enforcement Issues in Our 21st Century

Economy, https://www.justice.gov/atr/events/public-workshops-agriculture-and-antitrust-enforcement-issues-our-21st-

century-economy-10. These were the first joint Department of Justice/USDA workshops ever held to discuss competition

and regulatory issues in the agricultural sector.

8. Bob Van Voris & Michael Hirtzer, Top U.S. Poultry Executives Face Prison if Convicted for Price-Fixing, BloomBerg News

(Oct. 26, 2021), https://financialpost.com/commodities/agriculture/top-u-s-poultry-executives-face-prison-if-convicted-

for-price-fixing.