Anti-competitive allegations hit egg and tomato industries

By Sarah Hills

- Last updated on GMT

Related tags United egg producers Federal bureau of investigation

A rise in the cost of eggs could in part be down to collusion within the food industry as Federal prosecutors are called on to investigate claims of possible price fixing.

Similarly, a shadow has also been cast over tomato processors in California as investigators are conducting an anti-competitive probe into the tomato industry, according to reports.

The concern that anti-competitive practices may have played a part in price rises in sectors of the food industry comes as food manufacturers and ingredients companies face rising costs due to the price of energy, feed and increasing global demand for basic commodities.

This week the Humane Society of the United States (HSUS) filed legal petitions with the Federal Trade Commission and the United States Department of Justice seeking civil and criminal penalties against the United Egg Producers (UEP), the nation's largest egg trade association, and a dozen major egg factory-farming corporations

The society accused the egg industry of a price-fixing scheme by limiting supply in order to “artificially inflate prices, eliminate competition, and defraud consumers”​.

Between August 2007 and March 2008, egg prices nationwide skyrocketed by more than 40 percent and at the fastest rates in 30 years.

The HSUS said that a key element of the price-fixing conspiracy is the "UEP Certified"​ logo and misleadingly-named "animal husbandry guidelines" which it describes as a “bogus animal welfare certification program”.

It claims that UEP developed and promoted these labels largely to monitor and cover up its price-fixing scheme, and to deceive consumers about the “profound suffering that egg-laying hens endure crammed into tiny cages”.

Gene Gregory, president of the UEP said that any charges of price fixing have no merit.

Egg processors

Meanwhile the Wall Street Journal (WSJ) reported that three of the largest US egg processors have received grand-jury subpoenas. Golden Oval Eggs LLC, Michael Foods Inc and MoArk LLC, a unit of Land O'Lakes Inc, confirmed to the WSJ that they had received subpoenas, sent by the US Attorney in Philadelphia, for the years 2002-08. They said they were cooperating with the inquiry.

Lawyers and industry executives said the criminal investigation is focused on the pricing and marketing of egg products, such as liquid and powdered eggs.

The companies were contacted by asking if they would like to comment, but they did not respond before publication.


In a separate inquiry, Federal Bureau of Investigation agents are interviewing executives of big California tomato processors and a federal grand jury in Sacramento has issued subpoenas. This is according to lawyers close to the case who told the WSJ that officials were trying to determine if dominant processors of tomatoes for canning, ketchup, salsa and sauces conspired to fix prices.

Tomato prices rose 16 percent in the year up to the end of August.

The actions are said to highlight a loophole in US law which allows farm groups and cooperatives to work together under antitrust exemptions, although it is a crime for competitors to collaborate on production or prices.

A Justice Department investigation into the citrus fruit industry also began last year and it has also been reported that inquiries are being made into cheese and other dairy markets where suppliers may have worked together to manipulate prices.

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