Q: Central Grocers has filed a class action lawsuit based on the packers violating the Sherman Act. Can you explain the Sherman Act?
The Sherman Act is the federal law prohibiting companies from fixing prices and manipulating markets.
Q: What is Central Grocers seeking with this class action lawsuit?
Central Grocers is seeking its overcharges related to having overpaid for beef as the result of price fixing among the defendants (the packers.)
Q: Do you think there is a chance we’ll see other retailers or grocers bring additional lawsuits against the big four beef processors?
There is a good chance this will happen because this is an accessible case and an accessible client. However, a few weeks have passed and we haven’t seen anyone else throw in.
Q: Can the beef processors plead guilty in this lawsuit?
They would be able to plead guilty in a criminal case, but this is a civil case. With this civil case they could ask to settle, but the packers clearly aren’t interested in this avenue, as they have brought forward 300 pages of motions to dismiss papers.
Q: If they were to settle, what would that look like?
What usually happens is the first to settle gets a better deal, and they end up cooperating in order to build a better case against the remaining defendants. As a defendant, you don’t want to be the last company standing because the stakes are higher.
Q: If Central Grocers walks away with a win, what do you think that win does for the rest of the cattle industry, specifically cattle producers?
A win would restore fairness and integrity to the market because it would mean people get their money back for having overpaid. On top of that, a win would hopefully send a message to the defendants not to overcharge again because the same sort of results will happen.
Q: As consumers face record high prices for beef at their grocery stores, do you think there is a chance the cattle industry could price itself out of a product?
No, because one of the characteristics that affects the beef industry and makes it conducive to price fixing is that demand is highly inelastic. This means that no matter what the pricing does, there is always going to be a market for it.
Beef has been around forever, it’s a tried and true source of protein. The packers know people will always buy beef, and because of this, they can raise prices and get away with it and not worry about losing the market. A marginal product would never have this issue.