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Tyson, Pilgrim's Pride Strike Deal To Settle Price-Fixing Allegations

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Tyson, Pilgrim's Pride Strike Deal To Settle Price-Fixing Allegations

Chicken producers Tyson Foods, Inc. (NYSE: TSN) and Pilgrim's Pride Corporation (NASDAQ: PPC) reached an agreement with poultry buyers to settle allegations of price-fixing, The Wall Street Journal reported.

What Happened: Tyson, the largest U.S. chicken supplier and Pilgrim, the second-largest supplier, were each accused of colluding with other major chicken companies to artificially increase chicken prices.

Pilgrim confirmed it will pay $75 million to settle civil claims with chicken buyers. Tyson confirmed a similar settlement but didn't disclose a figure. As part of the financial settlement, neither company admitted to wrongdoing. The chicken companies claim rising chicken prices were the result of higher grain costs and growing demand for chicken.

Tyson and Pilgrim's settlement doesn't cover lawsuits filed separately by individual plaintiffs, according to WSJ. Some of the ongoing lawsuits were initiated by major clients, including chicken restaurant giant Chick-fil-A, supermarket operators, and food-service distributors.

Related Link: Chick-fil-A Takes Legal Action Against Chicken Producers, Alleges Price Fixing

Why It's Important: The chicken companies remain in the crosshairs of government regulators. The U.S. Justice Department's criminal investigation is looking into allegations that chicken companies exchanged business practices with each other, including quotes that were presented to customers.

What's Next: Tyson continues to cooperate with the Justice Department and it could avoid criminal prosecution in exchange for helping the probe. Pilgrim already reached a plea deal with the Justice Department as part of a criminal price-fixing investigation.

Price Action: Shares of Pilgrim are down 1.59% to $19.23; Tyson shares down 0.22% to $64.57 at publication time.

 

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