McDonald’s Sues Top Meat Packers for Alleged Collusion
According to the article, McDonald’s has some beef with today’s largest meat packers.
The “Big Four”
The fast-food giant is suing the U.S. meat industry’s “Big Four” — Tyson, JBS, Cargill and National Beef Packing Company — and their subsidiaries, alleging a price fixing scheme for beef specifically. In a recent federal complaint filed in New York, McDonald’s accused the companies of anticompetitive measures such as collectively limiting supply to boost prices and charge “illegally inflated” amounts.
Allegations of Collusion
This collusion caused the beef market to become “a monopoly in which direct purchasers were forced to buy at prices dictated by (the meat packers),” McDonald’s suit reads — later noting that the injury it has sustained as one of those buyers is what “antitrust laws were designed to prevent.”
McDonald’s alleges that the meat packers’ conspiracy dates back nearly a decade, at least as early as January 2015, and continues today. Its suit argues these companies' actions violate the Sherman Act, a federal antitrust law.
Tyson, JBS, Cargill and National Beef did not immediately respond to requests for comment. But these companies have faced federal probes and allegations of price fixing before.
Other Related Lawsuits
Lawsuits filed by grocery stores, ranchers, restaurants and wholesalers have piled up over the years. Some litigation is still pending, although meat packers and processers have opened their wallets in the past.
In 2022, for example, JBS agreed to a $52.5 million settlement in a similar beef price-fixing lawsuit. And Tyson agreed to pay $221.5 million back in 2021, after facing class-action claims that alleged purposely inflated chicken prices.
Such settlements did not include admissions of wrongdoing, however. Meat processors have previously maintained that larger supply and demand factors out of their control, not anticompetitive behavior, has caused prices to go up. Meat processing plants were occasionally closed during the height of the COVID-19 pandemic, for example, and the industry has also faced labor shortages that were worsened by the pandemic.
Still, lawsuits like the one from McDonald’s point to increased profit margins during the alleged time of conspiracy — and argue that overall concentration of the market helps facilitate collusion.
“Conspiracies are easier to organize and sustain when only a few firms control a large share of the market,” McDonald’s suit reads. Data from recent years has showed that Tyson, JBS, Cargill and National Beef control more than 80 percent of the U.S. beef market combined, the suit notes.
McDonald’s is seeking a trial by jury. The Chicago-based chain, which did not immediately respond to a recent request for further comment, has more than 39,000 locations across over 100 countries worldwide, including about 13,000 in the U.S. The vast majority are franchised.
Discussion Questions
1. Define collusion. Why is collusion illegal?
Collusion is defined as a secret or illegal cooperation or conspiracy, especially to cheat or deceive others. In the context of antitrust law, collusion is illegal because it does not foster competition in the marketplace—Less competition leads to higher consumer prices, lower quality, and/or less selection of goods and services.
2. What is the Sherman Act?
The Sherman Antitrust Act of 1890 is a U.S. antitrust law that seeks to ensure free competition among those engaged in commerce. To do so, the act prohibits unfair monopolies. The Sherman Act prohibits: (1) anticompetitive agreements and (2) unilateral conduct that monopolizes or attempts to monopolize a particular market. The act authorizes the U.S. Department of Justice to bring suits to prohibit conduct violating the act, and authorizes private parties injured by conduct violating the act to bring lawsuits for treble (i.e., triple) damages.
The law seeks to prevent the artificial raising of prices by the restriction of trade or supply. An “innocent” monopoly (i.e., a monopoly achieved solely by merit), is legal, but acts by a monopolist to artificially that status, or nefarious dealings to create a monopoly, are not.
The purpose of the Sherman Act is not to protect competitors from harm from legitimately successful businesses, nor to prevent businesses from gaining honest profits from consumers, but rather to preserve a competitive marketplace to protect consumers from abuses.
3. McDonald’s is the largest fast-food restaurant chain in the United States and the world. In terms of its “beef” against the U.S. meat industry’s “Big Four” (Tyson, JBS, Cargill, and National Beef Packing Company) is this a classic case of the “pot calling the kettle black?” Explain your response.
As of 2024, McDonald’s only holds approximately 25 percent of U.S. fast food restaurant market share, so one would be hard-pressed to call McDonald’s a monopoly in its industry. In stark contrast, as the article indicates, the U.S. meat industry’s “Big Four” (Tyson, JBS, Cargill, and National Beef Packing Company) controls more than 80 percent of the U.S. beef market combined. Add collusion to the mix (if the allegations are true), and it is much easier to call that combination an illegal restraint of trade.