The four largest beef packers in North America are facing a possible class-action lawsuit in Québec alleging the companies have colluded to raise the price of beef since 2015.
Option consommateurs, a non-profit consumer organization, filed an application on March 24 to institute the class action against Cargill, Inc., JBS USA Food Company, Tyson Foods Inc. and National Beef Packing Company, alleging they conspired to restrict competition related to the production, supply or sale of beef in Québec.
Members of the class action include anyone who purchased beef in Québec on or after Jan. 1, 2015.
The four companies have a monopoly in the North American beef market, owning 85 per cent of the Canadian market and 80 per cent of the American market, the lawsuit says.
“We’re talking about a product that a lot of people purchase,” said Sylvie De Bellefeuille, a lawyer with Option consommateurs. “It’s affecting people’s basic food purchases.”
The class action is currently at the authorization stage, meaning it may not be approved.
In an emailed statement to the Star, Cargill said “the claims lack merit.”
“We compete vigorously in the market and conduct ethical business, and we are confident in our efforts to maintain market integrity on behalf of our customers and consumers,” the Cargill statement said.
The three other beef packers in the lawsuit did not respond to requests for comment by the time of publication.
From January 2021 to January 2022, the cost of beef rose 13 per cent, according to Statistics Canada. Even before the pandemic, the cost of certain beef products were on the rise. In 2015, one kilogram of prime rib roast cost an average of $28.61. As of January 2019 it cost $31.99 and by January 2022 it cost $43.79.
The class action seeks a judgment ordering the four companies to pay members a financial amount equivalent to the profits made from the artificial inflation of the selling price. The amount is unknown at this time, De Bellefeuille said, but added it could be “huge” if the suit is successful, due to the size of the class action.
De Bellefeuille said Option consommateurs uncovered the alleged price fixing after being made aware of an ongoing class action being pursued in B.C., which alleges the same four beef packers have been involved in price fixing.
Price fixing happens when competitors agree to raise or lower prices, instead of establishing prices independently.
On Feb. 2, 2022, in a separate lawsuit, JBS USA agreed to pay $52 million (U.S.) to settle litigation accusing meatpacking companies of conspiring to limit supply in the U.S. beef market to inflate prices and boost profit.
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The settlement came one month after U.S. President Joe Biden announced a plan to bolster competition and stop “exploitation” in the meat sector.
“Because of the ongoing lawsuit in B.C. and the information in the U.S., the information lead us to believe there is a cartel in the beef industry,” De Bellefeuille said.
The case has similarities to Canada’s largest grocers being involved in an alleged 14-year scheme to fix bread prices. The court documents detail how the alleged scheme worked: the agreed-upon price increases were, on average, about 10 cents per product per year, with seven cents going to the suppliers and three cents to the retailers.
The pattern became known colloquially as “the 7/10 convention.”
Loblaw Companies Ltd. and George Weston Ltd. admitted their participation and were granted immunity from prosecution from the Competition Bureau, but Metro, Sobeys, Giant Tiger and Walmart have continued to deny involvement.
The Competition Bureau is still investigating those allegations of bread price-fixing.
The meat price-fixing class action is different in key ways, said Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University.
For one, the meat lawsuit takes aim at the packers and not the grocers. De Bellefeuille said that’s because the grocers are class-action members as they buy the beef from the packers.
Charlebois also noted the bread lawsuit came about after Loblaw had already admitted guilt, whereas none of the meat packing companies have admitted wrongdoing.
There have been “rumblings” about beef prices for years, though, and Charlebois said the class action may very well be successful.
“Consumer trust was affected by the bread price-fixing scheme,” he said.
Charlebois noted that beef prices rose significantly in 2022, and he’s not sure why. Dalhousie’s annual price report predicted that beef prices would get a break this year after their meteoric rise last year, but that hasn’t been the case.
“I think we should be expecting more of these lawsuits to occur,” said Charlebois, given the impact of inflation across the food industry.
With files from Rosa Saba
Clarrie Feinstein is a Toronto-based staff reporter for the Star. Reach Clarrie via email: firstname.lastname@example.org
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