A supplier for Burger King, Kroger and Walmart was indicted for participating in a nationwide conspiracy to fix prices and rig bids for broiler chicken products.
Separately, a federal grand jury in Denver returned an indictment charging four executives of Koch Foods, headquartered in Park Ridge, Illinois, for their roles in the same conspiracy.
The indictments allege that chicken producer Pilgrim’s Pride former executives Jason McGuire, Timothy Stiller, Wesley “Scott” Tucker and Justin Gay conspired to suppress competition for sales of broiler chickens, or chickens that are raised specifically for meat production and sold to grocers and restaurants, and were charged with violating the Sherman Act.
“Today the U.S. Department of Justice (DOJ) announced an indictment against Koch Foods as part of DOJ’s long-running investigation into alleged price fixing of the price of Broiler Chickens. Koch steadfastly denies that it or any of its employees engaged in price fixing,” said a statement posted by the company.
“During DOJ’s lengthy investigation, it has repeatedly asked Koch to plead guilty, and has suggested that any punishment would potentially be lessened if Koch did that,” said the statement. “We are aware that this would certainly be the easiest way to resolve this case. However, we have very carefully considered this option and in good conscience cannot agree.”
“Koch has seen no evidence to date that it or any of its employees have committed any crime,” said the statement. “Pleading guilty, then, is more than a matter of paying a fine or admitting a violation of the law—it is an admission of a violation of Koch’s integrity and core values. We do not take this lightly. While it will require extraordinary resources to have our day in court, Koch feels that it must vigorously defend itself against DOJ’s allegations.”
According to court documents, the four charged former Pilgrim’s Pride executives are Jason McGuire, a former executive vice president of sales for prepared foods; Timothy Stiller, a former General Manager of Fresh Food Services and Small Bird Debone; Wesley “Scott” Tucker, a former National Accounts sales executive; and Justin Gay, a former director of Fresh Foodservice Sales.
The indictments allege that the defendants and co-conspirators conspired to suppress and eliminate competition for sales of broiler chicken products, which are chickens raised for human consumption and sold to grocers and restaurants. Koch’s senior vice president, William Kantola, is among ten individuals indicted in October 2020 for their roles in the conspiracy.
On May 19, a grand jury returned an indictment against Claxton Poultry for its role in the same conspiracy, which today’s indictment supersedes.
Pilgrim’s Pride, a major broiler chicken producer based in Greeley, Colorado, pleaded guilty and was sentenced in February 2021 to pay a criminal fine of $107 million for its role in the conspiracy.
The long-running conspiracy began as early as 2012 and lasted until at least 2019.
“As today’s charges show, the division remains committed to holding both individuals and companies accountable when they choose profits over following the law,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s antitrust division. “Our investigation into criminal price fixing of broiler chickens continues, and we will not stop until we ensure that wrongdoers are held accountable and competition is restored to this critical industry.”
“Price fixing is not a victimless crime, and the illegal actions taken by these companies and individuals in the broiler chicken industry have had a direct and negative impact on the American consumer,” said Assistant Director in Charge Steven M. D’Antuono of the FBI Washington Field Office. “The FBI is committed to pursuing those who violate antitrust laws, harming the nation’s free and competitive marketplace all for their own monetary gain.”
“Price fixing, bid rigging and related activities harm consumers and our system of free market competition,” said Scott Kieffer, assistant inspector general for investigations at the U.S. Department of Commerce, Office of Inspector General. “We remain committed to working with the Department of Justice and our law enforcement partners to aggressively investigate and prosecute corrupt behavior in order to protect the integrity of our nation’s commerce.”
Koch Foods, McGuire, Stiller, Tucker and Gay are each charged with a violation of the Sherman Antitrust Act.
The company along with defendants McGuire, Stiller, Tucker and Gay will make their initial court appearances on Aug. 11 before U.S. Magistrate Judge Crews of the U.S. District Court for Colorado.
The Sherman Act carries a statutory maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims, if either of those amounts is greater than the statutory maximum fine.
This case is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the broiler chicken industry, which is being conducted by the Antitrust Division with the assistance of the Department of Commerce Inspector General’s Office, the FBI’s Washington Field Office and the U.S. Department of Agriculture Inspector General’s Office. The case is being prosecuted by the Antitrust Division.
Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the broiler chicken industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.
Koch Foods senior vice president William Kantola was one of 10 individuals charged in October of 2020 for their roles in the same conspiracy, which began in 2012 and lasted until 2019.
Pilgrim’s Pride, which is based in Colorado, pleaded guilty to the conspiracy in February of 2021, and a court ordered the company to pay a fine of $107 million.
According to the company’s plea agreement, from as early as 2012 and continuing at least into 2017, Pilgrim’s role in the conspiracy affected at least $361 million in its sales of broiler chicken products.
Pilgrim’s Pride also previously agreed to pay chicken buyers $75 million to settle an antitrust lawsuit, according to an SEC filing in January. However, the company did not admit any liability, adding that it believes the settlements were in the best interests of the company and its shareholders.
Despite similarities in the company names and the fact that both were founded by men named Fred Koch, Koch Foods has no relation to Koch Industries (founded by Fred C. Koch) or the Koch brothers; their founders are two entirely different people