Tyson, Pilgrim's Pride sued by food distributors alleging collusion

By Food and BeverageDow Jones Newswires

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The two largest food distribution companies in the U.S. have launched lawsuits against the chicken industry, accusing Tyson Foods (NYSE:TSN), Pilgrim's Pride (NASDAQ:PPC), Sanderson Farms (NASDAQ:SAFM) and other poultry suppliers of manipulating wholesale chicken prices.

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Sysco (NYSE:SYY) and US Foods Holding (NYSE:USFD), which supplies food to U.S. restaurants, hotels and hospitals, alleged in separate lawsuits that the big chicken processors engaged in a years-long conspiracy to limit poultry supplies, while pushing prices higher by manipulating a pricing benchmark.

A Tyson spokesman called the claims "unfounded" and said the company would contest the lawsuits. Representatives for Pilgrim's Pride and Sanderson had no immediate comment. Spokeswomen for Sysco and US Foods declined to comment Wednesday.

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The 131-page lawsuits, filed late Tuesday in a federal court in Illinois, are the latest in a string of lawsuits and probes involving the companies that control the U.S. chicken industry, which produces about 41 billion pounds of meat annually for grocery stores, restaurants, and foreign-based buyers.

Together, Sysco and US Foods represent roughly 25% of the domestic food distribution business. Regional grocery-store chains and restaurant companies have filed similar lawsuits against U.S. chicken companies over the past 18 months, but the food distributors are the biggest companies so far to allege collusion among the meat processors that supply an estimated 90% of the country's chicken.

--Heather Haddon contributed to this article.

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