Financing

Pilgrim's Pride pleads guilty to rigging restaurant chains' chicken costs

The poultry supplier was sentenced to a $108 million fine for colluding over roughly a 5-year stretch ending in 2017.
chicken costs
Photo courtesy of Pilgrim's

Pilgrim’s Pride has been sentenced to pay a $108 million fine after pleading guilty to federal charges that it conspired to drive up the prices paid by restaurant chains and supermarket shoppers for chicken.

Under a plea bargain hammered out in a Colorado federal court, the poultry supplier admitted that it colluded with other providers to  (DOJ) suppress competition and boost the price of its chicken. According to the charges brought by the U.S. Department of Justice, the price fixing figured into $351 million in sales over roughly a five-year period that began in 2012.

KFC and Chick-fil-A have been widely identified as customers of Pilgrim’s, one of the nation’s largest poultry processors.

The plea bargain is the result of an ongoing probe by DOJ, the FBI, the U.S. Department of Commerce and the U.S. Department of Agriculture into price fixing by many of the nation’s largest suppliers of broilers, or chickens raised for human consumption.

“We will continue to work with our law enforcement partners to pursue such illegal activity and ensure perpetrators are held accountable,” Peggy Gustafson, Commerce’s inspector general, said in a statement.

Ten former executives of major chicken suppliers have been indicted to date as a result of the investigation. All 10 have pleaded not guilty to charges that they participated in the price fixing.

In January, Tyson Foods agreed to pay $221.5 million to settle class-action lawsuits alleging that it rigged prices over a 12-year period. Tyson, one of the world’s largest suppliers of proteins, admitted no wrongdoing as part of the settlement.

The revelations about price-fixing have come to light as restaurant chain after restaurant chain is adding a chicken sandwich in hopes of capturing the sort of sales that Popeyes Louisiana Kitchen enjoyed when it introduced its version. In addition, a number of full-service restaurant operators have developed virtual delivery-only concepts that specialize in chicken wings and tenders.

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