Major Egg Producers Face Class Action over Alleged Price Fixing

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A class action lawsuit was filed Thursday against 3 egg trade groups and 13 of the country's largest egg producers, alleging that these entities unlawfully conspired to fix the prices of shell eggs and egg products in violation of antitrust laws.

The lawsuit alleges that the conspiracy has been undertaken primarily through a near industry-wide agreement to reduce the number of laying hens (and thus, eggs) at various egg farms. A key component of this program was to marginally increase cage space for laying hens under the auspices of animal husbandry. However, as detailed in numerous internal industry documents, the true goal of the program was to act as a "roadmap" for an illegal supply restriction scheme. As fewer hens were kept per cage, UEP and its members agreed not to replace the lost chickens by adding more cages or increasing capacity. As a result, egg supplies began to drop and prices soared in 2007 to the present.

Furthermore, cartel members agreed to manipulate molting practices and to cull chickens sooner (but not replace them) once their egg production had started to decline. The conspirators also implemented several below-cost export schemes to deflate supply and raise domestic prices.

The lawsuit is based on a 6 month investigation of internal newsletters, documents, and industry statements - many of which have never been released to the public. It also follows recent pronouncements that the U.S. Department of Justice has been investigating price collusion by at least 3 of the defendants in the lawsuit: Michael Foods Inc.; Golden Oval Eggs LLC; and Moark LLC. All 3 companies issued statements indicating that they are cooperating with federal authorities.

The lawsuit was filed in United States District Court for the Eastern District of Pennsylvania against United Egg Producers, Inc. ("UEP"); United Egg Association ("UEA"); United States Egg Marketers, Inc. ("USEM"); Cal-Maine Foods, Inc.; Hillandale Farms of PA., Inc.; Daybreak Foods, Inc.; Golden Oval Eggs, LLC; Michael Foods, Inc.; Michael Foods Egg Products Co.; Midwest Poultry Services, L.P; Moark LLC; Norco Ranch, Inc.; National Food; NuCal Foods, Inc.; Rose Acre Farms, Inc.; and Pilgrim's Pride Corp.

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