McDonald's sued major beef producers for price fixing

Erlinger denied that McDonald's price increases were double or triple the rate of inflation. But he acknowledged that, from 2019 to 2024, the average price of McDonald's menu items will increase by 40 percent.

What the executive didn't mention — but was painstakingly detailed in a lawsuit filed Oct. 4 in federal court in New York — was the company's allegation that the world's largest meat processors have been conspiring to limit beef supplies since at least 2015, leading them to sell to McDonald's and others. The meat sold for its high price.

“The object of their conspiracy was to fix, raise, stabilize and/or maintain the price of beef sold to plaintiffs and others at a supra-competitive level – that is, the price of beef would have been artificially higher than it would have been in the absence of their conspiracy. ,” McDonald's attorneys alleged in their complaint. The suit names Tyson Foods, Cargill, JBS and National Beef Packing as defendants. Combined, these companies control 82 percent of the beef market, according to a 2021 summary from the National Economic Council.

McDonald's is the latest plaintiff to accuse the Big Four meatpackers of violating the Sherman Antitrust Act. Ranchers, cattle dealers, consumers and beef buyers have also sued Tyson, Cargill, JBS and National Beef over similar allegations. The charges have been consolidated in Minnesota federal court.

Tyson, Cargill, National Beef and JBS did not immediately respond to The Washington Post's request for comment. However, the companies have denied the allegations in other cases. McDonald's also did not respond to a request for comment.

In 2022, JBS agreed to settle a $52.5 million claim from direct buyers. Last year, US District Judge John R. Tunheim dismissed a lawsuit brought by ranchers who claimed they were harmed by the meat packers' alleged practices, even though the ranchers did not sell cattle directly to the company.

The alleged behavior of meatpackers has drawn scrutiny outside the courts. In 2020, the Justice Department reportedly subpoenaed four meatpackers in an antitrust investigation. A year later, about 30 members of Congress sent a letter to the Justice Department, suggesting that it was time for the government to “determine whether the big meatpackers' stranglehold on the beef processing market is violating our antitrust laws and principles of fair competition.”

“Over the past several years, live cattle prices have fallen in the U.S. market, while boxed beef prices have risen significantly, raising prices for consumers at the grocery store. At the same time, major packing companies have realized significant profits, while both U.S. beef consumers and independent cattle producers have paid the price,” the lawmakers wrote. “These large price disparities are driving independent cattle producers out of business and consumers needlessly overpriced beef. , forcing to pay excessively inflated premiums.”

In its complaint, McDonald's alleges that the price per hundred pounds of cattle has historically been between $20 and $40 per hundred pounds of the average price of wholesale beef. But that correlation began to change dramatically around 2015, the lawsuit alleges: By 2021, the difference had ballooned to $156.50. The latest data from the US Department of Agriculture supports the spread of 2021 farm-to-wholesale prices.

“By the end of 2021, the two largest defendants, Tyson Foods and JBS USA, were reporting record margins, or net income, in their beef businesses,” McDonald's alleged in the complaint.

In December, Target, BJ's Wholesale Club, Gordon Food Service and Glazier Foods also filed an antitrust lawsuit against the big four meat packers, relying on the same New York law firm that brought the McDonald's case.

During the pandemic, the Biden administration also noted record profits for the Big Four at a time when many small businesses were suffering.

“During the pandemic, wholesale beef prices rose much faster than input prices for cattle,” the White House noted in a briefing filed in part by then-National Economic Council Director Brian Deese. “This means that the price the processors pay the ranchers is not going up, but the price collected by the processors from the retailers is going up.”

Beef and veal prices rose the most from August 2023 to August 2024, according to the U.S. Bureau of Labor Statistics' Consumer Price Index report. The price of uncooked beef was even higher: it rose 4.9 percent. These numbers reflect prices that consumers will see in supermarkets, not restaurants.