Friday, July 1, 2022
CapitalPress.com 5
Food distributor accuses ‘Big
Four’ beef packers of price-fixing
By MATEUSZ PERKOWSKI
Capital Press
A major food distributor has
accused the “Big Four” beef pack-
ers of fixing prices and manipulating
markets to the detriment of ranchers
and consumers.
Sysco, a Texas-based company
that distributes food to restaurants,
hotels and other facilities, has filed
a lawsuit alleging violations of anti-
trust laws by Cargill, JBS, Tyson and
National Beef.
The complaint claims the beef
packers colluded since at least 2015
to reduce their purchases of cattle,
thereby driving down livestock prices
while increasing meat prices.
The plaintiff has asked for a jury
trial and will be seeking an injunction
against the alleged anti-competitive
behavior as well as unspecified finan-
cial damages.
“The principal, but not exclusive,
means Defendants have used to effec-
tuate their conspiracy is a scheme
to artificially constrain the supply
of beef entering the domestic supply
chain,” the complaint said. “Defen-
dants’ collusive restriction of the beef
supply has had the intended effect of
artificially inflating beef prices.”
The case was filed in a Texas fed-
eral court and is set to proceed before a
judge in Houston.
According to the lawsuit, a former
quality assurance officer at a JBS facil-
ity “has confirmed the existence of a
conspiracy” among the beef packers,
which is corroborated by statistics that
show “industry-wide slaughter and
capacity reductions.”
The four meat packers collectively
generate about 80% of the U.S. beef
supply and control an even higher pro-
portion of the domestic cattle market,
as well as the associated “supply and
distribution chain,” the complaint said.
By exploiting their market power,
the companies have “created sur-
pluses in the cattle market and short-
ages in the wholesale beef market,”
artificially raising their profit margins
higher than they can achieve under
competitive conditions, the complaint
said.
“United by their conspiracy, Oper-
ating Defendants were confident that
none of them would break ranks and
disproportionately expand their beef
production to satisfy unmet demand,”
the plaintiff claims. “Armed with
J. Scott Applewhite/Associated Press File
A major food distributor has ac-
cused the “Big Four” beef packers
of price-fixing. Last year, a federal
judge allowed a similar case to pro-
ceed, ruling that testimony from
former workers is sufficiently de-
tailed direct evidence of collusion.
this assurance, Operating Defen-
dants improved their meat margins by
achieving and sustaining an unprec-
edented gap between cattle and beef
prices.”
Production was decreased in “rela-
tive lockstep” at their domestic facili-
ties despite ample cattle available and
even though the demand for beef was
surging, the complaint said.
“Operating Defendants did not do
the things true competitors would do
in a competitive market. They did not
attempt to capture each other’s mar-
ket share or lower prices as their costs
declined,” according to the lawsuit.
Representatives of Cargill, JBS,
Tyson and National Beef did not
respond to requests for comment as of
press time.
Last year, a federal judge in Min-
nesota refused to dismiss a similar
price-fixing lawsuit originally filed
against the beef packers in 2020 by
groups representing ranchers, food
companies and consumers.
Chief Judge John Tunheim of the
U.S. District of Minnesota previously
dismissed the case without prejudice,
allowing the complaint to be refiled,
because the plaintiffs haven’t plausibly
alleged direct evidence of a conspiracy.
The plaintiffs amended their lawsuit
to include testimony from two confi-
dential witnesses who claim the beef
packers purposely reduced slaughter
to depress cattle prices. One of those
witnesses is also cited in Sysco’s new
lawsuit.
Last September, the judge deter-
mined this testimony represented
“sufficiently detailed direct evidence”
to proceed with the antitrust litigation
and rejected the defendants request to
dismiss the case.
Don Jenkins/Capital Press
Inflation is pumping up Washington state taxes. Two Republican legislators June 22 said the
state should provide tax relief by suspending the gas tax.
Inflation pumps up Washington
coffers, prompts call for tax relief
By DON JENKINS
Capital Press
OLYMPIA — Because of
inflation, Washington residents
are paying higher sales taxes
on goods and services, rais-
ing government revenues and
increasing calls from Republi-
cans to suspend the state fuel
tax.
The state anticipates collect-
ing $1.4 billion more in taxes
over the next year than forecast
four months ago, the state’s
chief economist, Steve Lerch,
said June 22.
“The higher inflation, of
course, has a big impact on
our tax collections,” he told the
bipartisan Economic and Reve-
nue Forecast Council.
“If inflation is higher, the
price of goods and services is
higher. That means the sales
and (business) taxes paid on
that also will be higher,” Lerch
said.
The council’s two Repub-
licans said lawmakers should
return money to taxpayers by
suspending the state’s 49.4
cents a gallon tax on gasoline
and diesel.
President Biden on June 22
asked Congress to suspend the
federal 18.4 cents per gallon
tax for three months.
Washington
Democrats
appear cool to the idea of sus-
pending the state gas tax. Gov.
Jay Inslee’s budget director,
David Schumacher, cautioned
against cutting taxes.
A spike in tax revenue could
be followed by a dip if the
economy sours further, he said.
“We’ve been in this situa-
tion before where we get an
upturn in revenue followed by
a downturn or recession and all
of a sudden we can’t meet our
obligations,” Schumacher said.
The Revenue and Economic
Forecast Council projects how
much money lawmakers have
to spend. State revenue typi-
cally rises and falls with the
health of the private-sector
economy.
So far, inflation, the highest
it’s been since 1981, has driven
up state revenues. Since Febru-
ary, the state has collected an
unanticipated $590 million in
taxes.
The windfall contributed to
the projection that the state will
collect $63.1 billion in general
taxes during the current two-
year budget, an 11.6% increase
over the previous biennium.
Lerch said he expects reve-
nue growth to taper off in 2023.
Tax collections could even fall
if the nation slips into a reces-
sion, he said.
Schumacher and Rep. Timm
Ormsby, D-Spokane, said the
threat of a recession was a rea-
son to stay away from tax cuts
now.
People will need govern-
ment help, Ormsby said. “It is
actually the time for targeted
investments,” he said.
The council’s Republicans,
Sen. Lynda Wilson of Van-
couver and Rep. Ed Orcutt of
Kalama, said suspending the
gas tax would give taxpayers
immediate relief.
Orcutt said that during flush
times the Legislature expands
state government. During lean
times, the Legislature raises
taxes to boost government rev-
enues, he said.
“When does the taxpayer
get their turn?” Orcutt asked.
“Why we can’t look at some
sort of tax relief is beyond me.”