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Potato producers could face price fixing lawsuit

By Caroline Scott-Thomas , 23-Feb-2011

The United Potato Growers of America, which represents about 80 percent of the United States’ producers of fresh and process potatoes, could face a massive lawsuit accusing it of price fixing.

 

The class action case names 24 defendants and claims that the United Potato Growers of America used “predatory, coercive, punitive and retaliatory measures” to ensure members reduced potato supply in order to fix prices paid to producers, and conspired with non-growers in the supply chain to increase the price.

 

“Defendants conspired to fix, raise, maintain and stabilize the prices for fresh and process potatoes in the United States starting as early as 2004. Their actions have reduced competition in the markets for fresh and process potatoes sold in North America,” the court document said.

 

Whether the case goes ahead depends on whether the alleged cartel is protected by the Capper-Volstead Act, which was passed in 1922 to allow agricultural cooperatives immunity to antitrust regulations under some circumstances.

 

The plaintiffs argue that the United Potato Growers of America is not entitled to this protection due to its efforts to restrict members’ agricultural production.

 

However, the organization has claimed that it has not acted illegally.

 

The Idaho Statesman quoted United Potato Growers of America spokeswoman Barb Shelley as saying: “We represent all the potato growers and the hands in the dirt. We view (the complaint) as an attack on our potato farmers who work every day to grow potatoes and to provide the country with an adequate supply of potatoes at a fair price."

 

A judge is due to hear motions to dismiss in the summer.

 

The antitrust lawsuit was filed in US District Court last week by Washington, D.C. law firm Hausfeld LLP on behalf of a New York produce wholesaler.

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