Justice Department’s Antitrust Division Indicts Claxton Poultry Farms in Expanding Criminal Prosecution of Chicken Producing Industry
The Justice Department’s criminal prosecution of the chicken producing industry took another significant turn. Step-by-step, the Antitrust Division is building a large and comprehensive criminal prosecution of a significant cartel.
Claxton Poultry Farms refused to plead guilty and cooperate in the Antitrust Division’s sprawling criminal prosecution. Instead, Claxton Poultry Farms became the second producer to be charged and the first to be indicted rather than negotiate a deal. Claxton Poultry Farms faces an uphill climb to escaping these charges. Corporations have a poor record of vindication, especially when prosecutors have indicted senior managers from Claxton Poultry Farms and charged them individually with participating in the same criminal conspiracy.
Pilgrim’s Pride Corporation plead guilty to participating in the same conspiracy and agreed to pay over $100 million. Pilgrim’s Pride is cooperating against its own executives involved in the conspiracy as well as other executives from other companies. Pilgrim Pride’s settlement involved a November 2012 contract in which Roger Austin and Jayson Penn communicated with colleagues from Claxton Poultry and other companies to ensure that the competitors maintained a specific price level during negotiations.
Tyson Foods is reportedly cooperating with the investigation and earned leniency protection for its initial disclosure of the conspiracy to federal prosecutors.
The grand jury in Colorado charged Claxton in a single-count indictment for criminal violation of Section 1 of the Sherman Act for conspiring to fix prices and rig bids for chicken products. The government has already charged two Claxton Poultry executives, President Mikell Fries and Vice President Scott Brady, with participating in a seven year conspiracy, from 2012 to 2019 to fix prices for chicken products sold to restaurants and grocery retailers. Fries and Brady have been charged in a large indictment against a total of ten individuals.
The Antitrust Division’s criminal investigation became public in 2019, three years after civil litigation involving alleged price-fixing in the chicken industry. In June 2019, the Antitrust Division revealed its investigation when it notified the Illinois federal court overseeing multidistrict litigation to seek a partial discovery stay pending the completion of the criminal probe.
In June 2020, the original indictment charged Pilgrim’s Pride executives, Jayson Penn and Roger Austin, the sitting president and CEO, and the former vice president, respectively, along with two other executives from Claxton Poultry. In a superseding indictment, the Antitrust Division charged two additional Pilgrim officers and managers: William Lovette, the former president and CEO, and Jimmie Little, a sales director. Jimmie Little was also charged with making false statements and obstruction of justice for lying to investigators.
As outlined in detail in prior indictments against the ten individuals, the defendants communicated via phone, text and email to coordinate bids to sell chicken products to purchase cooperatives, restaurants and grocery chain stores. The indictment against the executives includes detailed references to telephone calls and text messages used to carry out the price-fixing and bid-rigging scheme. The criminal case against the executives is currently scheduled for trial in August.