A Price Screen for Collusion: Applications to the U.S. Beef and Pork Industries

This research applies a price screen for collusion to the recent alleged price-fixing conspiracies in the U.S. beef and pork industries. This price screen assesses whether the behavior of wholesale beef and pork prices is consistent with the hypothesis that product (output) prices are higher and less volatile during the cartel period, compared to a more competitive period. In the case of beef, empirical evidence supports this hypothesis: the wholesale beef price is higher and less volatile in the alleged cartel period, compared to a prior period. In the case of pork, the empirical evidence is mixed: the wholesale pork price is higher and more volatile in the alleged cartel period, compared to a prior period. The empirical evidence provided by the price screen should not be interpreted as actual evidence of collusion. In addition, when applying the price screen to the beef and pork industries and interpreting the screen results, it is essential to consider that the observed market prices for livestock and meat products are influenced by a livestock production and price cycle. Considering increased attention to competition issues in the U.S. beef and pork industries, the U.S. Department of Agriculture and the Department of Justice should consider applying price screens for collusion to data available from the U.S. Department of Agriculture, including the livestock mandatory reporting data.