As Americans deal with high prices of beef both at the grocery store and at the drive-thru, fast food giant McDonald's is seeking to go after what it believes to be the root of the problem.
On Oct. 4, McDonald's filed a lawsuit in New York federal court against Tyson Foods, Cargill, JBS, and National Beef Packing—four of the world's largest meat processors—alleging that they've been conspiring to limit beef supplies since at least 2015. This conspiracy, the company said, led to higher prices on the meat they sell to McDonald's and other food providers.
"The goal of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold to [McDonald's] and others at supra-competitive levels—that is, prices artificially higher than beef prices would have been in the absence of their conspiracy," McDonald's legal team said in the complaint, per The Washington Post.
"[The] per-pound price of cattle had historically stayed within 20 to 40 dollars of the per-pound average wholesale price of beef," the suit says, though it noted that trends started to shift drastically around 2015. That difference between price per pound of cattle and average price per pound of wholesale beef had risen to $156.50 by 2021, according to the complaint. "[By] the end of 2021, the two largest defendants, Tyson Foods and JBS USA, were reporting record margins or net revenue in their beef business," the lawyers pointed out.
"Only colluding meatpackers would expect to benefit by reducing their prices and purchases of slaughtered cattle because they would know that their conspiracy would shield them from the dynamics of a competitive marketplace," they added, per Reuters.
McDonald's joins other major corporations in their suits against the big four meatpackers, as Target, BJ's Wholesale Club, Gordon Food Service, and Glazier Foods similarly filed antitrust suits against them in December 2023.
The alleged price fixing and subsequent higher prices for consumers resembles allegations of price gouging by some grocery store chains today. In August, a Kroger executive confirmed that the supermarket giant, which owns other popular chains like Ralphs and Harris Teeter, raised the price of eggs and milk beyond inflation figures.
Related: Expect Beer Prices to Rise Significantly Due to Inflation
Beef sellers' alleged price-fixing racket caught the attention of the Department of Justice and members of Congress. In 2020, DoJ reportedly subpoenaed the four big meatpackers in an antitrust investigation; the following year, several members of Congress sent the Department a letter urging it "to determine whether the stranglehold large meatpackers have over the beef processing market violate our antitrust laws and principles of fair competition."
“In the last several years, the price of live cattle in the United States market has plummeted, while the price of boxed beef has significantly increased, raising consumer prices at the grocery store. Concurrently, the major packing companies realized significant profits, while both U.S. beef consumers and independent cattle producers paid the price," the group of representatives wrote. "These large price disparities are leading independent cattle producers to go broke and causing consumers to pay an unnecessary, over-inflated premium on beef."
