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Pilgrim’s to Pay $110 Million Fine for Chicken Price Fixing (1)

Oct. 14, 2020, 4:25 PM

Pilgrim’s Pride Corp. will pay a $110.5 million fine after striking a plea deal with the U.S. Department of Justice on price-fixing allegations that have ensnared two former CEOs of the second-biggest American chicken producer.

The unit of Brazilian meat giant JBS SA reached a plea agreement over limiting competition on three chicken contracts with a U.S. customer, the Greeley, Colorado-based company said Wednesday. The arrangement is subject to approval by the U.S. District Court of Colorado and provides that the antitrust division refrain from further charges if the company complies.

The price-fixing allegation came as U.S. meat processors were under fire from the Covid-19 pandemic in which thousands of slaughterhouse workers caught the virus and prompted shutdowns earlier this year that temporarily tightened supplies of poultry and red meat. News of the fine comes on the same day as an announcement that JBS’s parent company admitted to violating U.S. anti-bribery laws.

Federal prosecutors expanded its price-fixing probe with an indictment earlier this month of six chicken-industry executives and managers. Building on a June indictment, prosecutors said a total of 10 people conspired over phone calls and text messages to rig prices paid by quick-serve restaurants between 2012 and 2019.

Included in the indictment were William Lovette, who stepped down as CEO of Pilgrim’s in 2019, and Jayson Penn, who succeeded Lovette and was first named in an indictment in June. Penn left Pilgrim’s last month and has pleaded not guilty.

Shares in the company jumped as much as 7%, the steepest intraday gain since June. Tyson Foods Inc., the top U.S. chicken producer, was up 0.8% at 12:07 p.m. in New York. Tyson has said it’s cooperating with the probe.

“We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s, providing certainty regarding this matter to our team members, suppliers, customers and shareholders,” Chief Executive Officer Fabio Sandri said in a statement.

The company said the fine will be filed as a “miscellaneous expense” in the third quarter for 2020. It will hold an earnings conference call on Oct. 29.

(Adds details of the probe and share-price reaction)

To contact the reporters on this story:
Michael Hirtzer in Chicago at mhirtzer@bloomberg.net;
Megan Durisin in London at mdurisin1@bloomberg.net;
Kanga Kong in Seoul at kkong50@bloomberg.net

To contact the editors responsible for this story:
Liezel Hill at lhill30@bloomberg.net

Nicholas Larkin, James Attwood

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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