Kellogg’s, General Mills, Kraft, and Nestle have sued United Egg Producers, United States Egg Marketers and 11 egg farms and distributors for conspiring to control prices and supplies in violation of antitrust laws.
Bloomberg News service reports the plaintiffs filed a complaint in federal court claiming they suffered damages as a result of the conspiracy to control the supply of eggs and to artificially maintain and increase pricing.
The case is Kraft Foods Global Inc. v. United Egg Producers Inc., 11-cv-8808, U.S. District Court, Northern District of Illinois (Chicago). Among the other defendants are Daybreak Foods Inc., Hillandale Farms of Pa. Inc., Michael Foods Inc., and Sparboe Farms Inc.
According to the complaint, from 1999 to 2008 the United Egg Producers and United Egg Marketers conspired to control supply and artificially maintain and increase the price of eggs.
“Beginning at least as early as August 2002 and continuing through at least March 2008, defendants engaged in coordinated, large-scale exports to control the supply of eggs. In a private document, UEP acknowledged that ‘exports [we]re only taken in large volume shipments over a very short delivery period for the purpose of having the greatest impact upon surplus supply reduction.’
“Defendants often exported eggs at a loss, and agreed to reimburse each other for related losses. These coordinated exports had a direct and substantial impact on domestic egg prices,” the complaint states.
Courthouse News Service notes the food companies say the conspiracy coincided with the elimination of almost 2,000 small egg farms.
More from the complaint:
“The relevant conspiracy period, starting in at least 1999 and continuing through at least 2008, coincided with the egg industry consolidation and rationalization. This reduced the number of producers and concentrated the production of eggs among a handful of large producers.
“By way of example, in 1987 the number of companies with flocks of 75,000 hens or more was around 2,500. In 2010, however, the number of companies with 75,000 hens or more (accounting for the ownership of 95 percent of layer hens) had shrunk to about 205.”
Courthouse News Service adds: The food companies claim farmers who refused to participate in the alleged scheme were punished. When Sparboe Farms left the program in 2003, United Egg President Gene Gregory allegedly pressured its customers, including Canada Egg Marketing Agency, Albertson’s and Wal-Mart, to find another supplier.
Plaintiffs claim the alleged conspiracy was revealed from public disclosures of a government antitrust investigation in 2008.
Courthouse News Service says plaintiffs seek monetary damages for antitrust violations and fraudulent concealment and an injunction barring the egg producers from controlling prices and supply.
December 16th, 2011