Price-Fixing in the United States Broiler and Pork Industries

During the recent decade a group of large meat processors in the U.S. broiler and pork industries implemented a series of production control practices at various stages of the broiler and pork supply chains. The meat processors used these practices to mitigate agricultural supply volatility and increases in agricultural input prices (i.e. feed prices), which led to the over-supply problem adversely affecting their profitability. Direct and indirect buyers of broilers and pork filed antitrust lawsuits alleging that by implementing these production control practices (i.e. production cuts), the meat processors engaged in unlawful conspiracies with the purpose of fixing, increasing and stabilizing prices of broilers and pork paid by various participants in the broiler and pork supply chains. The research presented in the paper applies a traditional theoretical framework explaining the seller market power to understand the economics of the conduct and performance of the U.S. broiler and pork industries in light of the alleged price-fixing conspiracies. It also provides a basic empirical evidence on the market and price behavior during the period of alleged price-fixing conspiracies (i.e. the implementation of production cuts) and the period preceding the implementation of production cuts.