OCTOBER 2017 FOOD & AGRICULTURE QUARTERLY PAGE 9 conspiracy , the plaintiffs claim , dates back to at least 2008 and violates both Section 1 of the Sherman Act — which makes it unlawful to enter into an agreement that restrains trade — and Section 202 of the Packers and Stockyards Act ( PSA ), which makes it unlawful for any live poultry dealer to engage in or use any unfair , unjustly discriminatory , or deceptive practice or device with respect to live poultry .
Plaintiffs assert the conspiracy actually comprises two alleged agreements : first , an agreement not to poach each other ’ s growers , and second , an agreement to share information through Agri Stats , an independent data aggregator and benchmarking service . The latter , according to the plaintiffs , was the mechanism through which defendants colluded to suppress grower compensation . Plaintiffs ’ PSA claims focus solely on the non-public data exchange of grower compensation rates , mechanical aspects of grow-out houses , broiler weights , transportation costs , bird mortality , broiler growth rates and production rates for grow-out houses .
As with many antitrust cases in the agricultural field , the plaintiffs argue that the structure of the industry permits an inference of collusion , including the fact that demand for broiler grow-out services is inelastic . Plaintiffs also argue there are high barriers to entry and exit the broiler market , especially as these processors have high fixed costs associated with establishing a broiler complex and a distribution network capable of delivering broilers to grocery chains or wholesalers . The plaintiffs argue they are at the processors ’ mercy as the growers cannot easily leave the business once they have contracted to provide grow-out service because of the substantial financial investments they have made that are tied to broiler-specific equipment and facilities .
As expected , the defendants have moved to dismiss the lawsuit , claiming the complaint does not adequately plead an antitrust or PSA claim . Briefing on motions to dismiss will conclude on November 22 , 2017 .
Distributor and consumer class actions
In contrast to the above , the various class actions consolidated in Chicago against the major poultry processors ( 14 defendants in total ) were brought by food distributors ( Direct Purchaser Plaintiffs ), commercial and institutional entities that purchased from the distributors ( Indirect Purchaser Plaintiffs ) and consumers ( End-User Plaintiffs ). These cases allege that the processors engaged in a supply management scheme that reduced output and raised market prices for processed chicken . The complaints allege a conspiracy to coordinate output and limit production by : ( 1 ) allocating markets for contracting growers , ( 2 ) restricting the supply of broilers through breeder flock reduction and early slaughtering , ( 3 ) manipulating a broiler price index , and ( 4 ) using alleged co-conspirator Agri Stats to circulate competitively sensitive data and as a mechanism for monitoring behavior of cartel participants . According to Plaintiffs , these coordinated steps were taken with the intended and expected result of increasing prices of broilers in the U . S .
As with the growers ’ cases , the defendants have moved to dismiss these actions . Amidst that briefing , on August 18 , 2017 , the Court preliminarily approved a settlement between
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