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Chick-fil-A sues chicken producers, alleging price fixing on billions of dollars of poultry

Chick-fil-A is alleging that chicken producers "communicated via phone and text message in order to share and coordinate confidential bidding and pricing information."
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People wear masks outside a Chick-fil-A in New York on July 14.Noam Galai / Getty Images file

The fast-food chain Chick-fil-A is suing a string of high-profile chicken suppliers, accusing them of illegally coordinating with one another to keep prices artificially high on billions of dollars of poultry.

The suit names 17 defendants, including Tyson Foods, Perdue Farms, Pilgrim's Pride and Sanderson Farms.

For Chick-fil-A, the country's largest chicken fast-food restaurant chain by sales volume, to join means in essence that "the retail side of the chicken industry is at war with the producers," said Christopher Leonard, a business reporter who has investigated the poultry industry, writing for Bloomberg and The Washington Post, and a fellow at New America, a left-leaning public policy think tank.

If the chain's suppliers aren't following the basic principles of capitalism and competition, Chick-fil-A customers are "paying more money for a lower-quality product," Leonard said in a phone interview.

The antitrust suit alleges that after Chick-fil-A announced that it would start serving antibiotic-free chicken at its restaurants in five years, "a number of Defendants communicated via phone and text message in order to share and coordinate confidential bidding and pricing information," details that emerged in a Justice Department investigation of the industry.

That accusation was in addition to allegations listed in its long-running litigation against chicken producers, which accuses them of using a spreadsheet called AgriStats to engage in "bid-rigging" in an "unlawful conspiracy" so chicken prices were "artificially raised."

AgriStats is supposed to be an anonymized collection of self-reported poultry producer activity, but it could be decoded if one knew how to crunch the numbers, so producers knew exactly what one another was doing, the lawsuits allege.

"This permits the defendants to share, on a weekly and/or monthly basis, their confidential production and pricing information, including forward-looking production information, which is easily forecasted on broiler breeder flock data that is reported and shared," according to the original complaint, In re Broiler Chicken Antitrust Litigation, now referred to as "the Maplevale suit," after its plaintiff, the food distributor Maplevale Farms.

Like many other agricultural industries, poultry for many years suffered from a boom-and-bust cycle in which demand and high prices would draw a surge of production but then oversupply would cause prices to drop. The falling prices would cause companies to cut production and limit supply. Eventually, prices would rise again, and the process would repeat.

But by enforcing production levels, poultry producers can even out the peaks and valleys and create a more stable market, with prices consistently above competitive levels, and reap "record profits" to boot, the Maplevale suit claimed.

Leonard, who has seen leaked copies of AgriStats, has previously told NBC News that the spreadsheet contains detailed information about the jealously guarded industry, including, for instance, the calorie count in feed and the number of egg-laying hens, which indicates future production.

NBC News contacted four poultry producers for comment on the lawsuit. Sanderson Farms said it does not comment on pending litigation, and Pilgrim's Pride did not respond to an emailed request.

Gary Mickelson, a spokesperson for Tyson Foods, said in an email: "Follow-on complaints like these are common in antitrust litigation. Such complaints do not change our position that the claims are unfounded. We will continue to vigorously defend our company."

Diana Souder, a spokesperson for Perdue Farms, said by email, "We believe these claims are unfounded and plan to contest the merits."

Chelsea Lee, a spokesperson for Chick-fil-A, said in an email, "We have nothing to add at this time."

On Friday, Target also filed, joining suits filed by other supermarket chains.