McDonald’s filed a federal lawsuit against the largest players in the beef industry, alleging a long-standing conspiracy to artificially inflate beef prices.
The lawsuit, filed in the Eastern District of New York, names Cargill, JBS, Tyson Foods, and National Beef as defendants, also known as the “Big Four” beef companies. In 2018, these companies represented roughly 80 percent of the fresh and frozen beef supplies to the U.S. market. The next-highest held a 2-3 percent market share.
The fast-food giant claims these companies colluded to restrict the beef supply and drove up prices for years, severely impacting the burger chain’s costs. The defendants, McDonald’s argues, engaged in illegal price-fixing and violated federal antitrust laws.
According to the complaint, McDonald’s accuses the defendants of agreeing to reduce their beef production and slaughter volumes starting in 2015 and artificially curbing the beef supply in the U.S. market. The companies allegedly manipulated production by idling processing plants, reducing operating hours, and managing slaughter schedules. By jointly restricting the supply of beef, the companies were able to charge above-market prices to McDonald’s and other purchasers.
The complaint claims that, while cattle prices declined, beef prices remained high due to this coordinated activity, which widened the gap between the cost of cattle and the wholesale price of beef. According to McDonald’s, the spread between these prices more than doubled during the period in question, further increasing the profit margins of the defendant companies.
“Defendants colluded during the Conspiracy Period to reduce supplies of beef in tandem, thereby raising and fixing beef prices at levels higher than prices that would have prevailed had the beef market been competitive,” McDonald’s said in court documents. “As a direct result, Plaintiff suffered antitrust injury by paying illegally inflated prices for beef it purchased from Defendants.”
McDonald’s alleges that plant closures were a key strategy in this conspiracy. As the complaint details, the defendants began systematically reducing the industry’s processing capacity shortly before 2015 by permanently closing several large facilities.
By removing processing capacity from the market, McDonald’s argues, these companies cemented their control over the beef supply and enabled themselves to drive up prices. While other, non-conspiratorial beef producers made modest capacity increases, McDonald’s claims these were insufficient to offset the market-wide shortage orchestrated by the defendants.
The complaint also states these companies had numerous opportunities to collude through industry trade associations, like the National Cattlemen’s Beef Association and the U.S. Meat Export Federation. Representatives from each company regularly attended these organizations’ meetings and events, which, according to McDonald’s, facilitated their coordination. These gatherings allegedly provided ample opportunities for the defendants to discuss strategies and solidify their conspiracy.
McDonald’s lawsuit comes on the heels of federal investigations into similar allegations. The U.S. Department of Justice and the U.S. Department of Agriculture have both reportedly looked into potential price-fixing in the beef industry. In 2020, the DOJ issued subpoenas to some of the named companies, seeking information on their pricing practices.
The burger brand also references a letter sent in June 2021 by 26 U.S. senators to the DOJ concerning the anticompetitive practices in the beef industry. The senators expressed their concerns about the control major meatpacking companies—including the defendants in McDonald’s lawsuit—exert over the beef market. They questioned whether this level of control violated antitrust laws and principles of fair competition.
The beef companies are facing a separate lawsuit involving similar issues from major retailers like Target and Kroger.
McDonald’s is seeking compensation for the inflated beef prices it paid during the conspiracy period, as well as injunctive relief to prevent further antitrust violations.
