Justice Department subpoenas big 4 packers in market manipulation investigation

According to reports from Bloomberg and other news agencies, the U.S. Department of Justice formally sent civil investigative demands, or subpoenas, to the country’s four largest meatpackers—Tyson Foods Inc., JBS SA, Cargill Inc., and National Beef Inc.—on June 4. This is effort was led by the DOJ’s antitrust division and is part of the investigation that’s looking into their pricing methodology during the Coronavirus outbreak.

U.S. Rep. Frank Lucas, an Oklahoma Republican, released a statement showing support for the investigative procedure June 5.

“The reports of the Department of Justice’s continued investigation into the meatpacking industry is encouraging news for cattle ranchers across America,” he said. “The Coronavirus pandemic exposed the vulnerabilities of America’s food supply chain and accentuated the challenges beef producers face with a market that is controlled by the actions of a few mostly foreign-based firms.”

National Beef in Kansas City, Missouri, confirmed to Bloomberg that it had received a civil investigative demand from the Justice Department.

“The request was very narrow in scope, which leads us to believe that the DOJ does not necessarily believe there is an antitrust issue,” National Beef said in a statement to Bloomberg.

Plant shutdowns because of concerns of further spreading the Coronavirus led to constrictions in the meat chain. In May, a bipartisan group of attorneys general, including Kansas Attorney General Derek Schmidt, asked the DOJ to investigate significant price swings in the cattle and beef markets to determine whether any illegal market manipulation had occurred. Since the fire at the Tyson Fresh Meats plant in Holcomb, Kansas, in 2019, the U.S. Department of Agriculture has been investigating beef pricing under the authority of the Packers and Stockyards Act. That investigation is still ongoing and now has been specifically expanded to include price disruptions during the COVID-19 pandemic.

“There have been tremendous disruptions in beef and cattle markets related to COVID-19,” Schmidt said in a statement. “The legal question is whether any other factors that may not be legally permissible also are at play. The underlying frustration of many cattle producers and feeders boils down to this: Why are they being paid significantly less for live cattle when consumers are paying more for beef on the grocer’s shelf? It is a reasonable question that deserves a review and fully informed answer.”

JBS USA Holdings, Tyson Foods, Cargill and National Beef account for 70 to 80% of the beef processing capacity in the United States, according to reports.

Congressman Lucas is a cattle rancher himself, and represents a wide segment of ranching country in Oklahoma.

“The DOJ’s investigation could shed light on these unsettling competition and security problems in our supply chain, and I join my fellow cattle ranchers in thanking the Department for their checks and balances on an increasingly competitive food industry,” he said his statement. “I urge U.S. Attorney General William Barr to share the findings of the department’s investigation with Congress as soon as possible so that policymakers can address the concerns of their investigation and restore confidence back into cattle markets.”

Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].