U.S. egg producers sued for alleged price fixing

NEW YORK, Sept 26 (Reuters) - A New York state restaurant has sued 13 major U.S. egg producers and three egg trade groups, contending they schemed to artificially fix prices over the past eight years by reducing the supply of eggs.

The lawsuit, which seeks class-action status, comes days after the U.S. Department of Justice said it is looking into possible antitrust violations in the egg products industry.

The plaintiff, T.K. Ribbing's Family Restaurant of Falconer, New York, contends that the defendants participated in a conspiracy that led to a drop in egg supplies and a jump in prices. The suit was filed on Thursday in the U.S. District Court for the Eastern District of Pennsylvania.

The defendants include Pilgrim's Pride Corp (PPC.N), Cal-Maine Foods Inc (CALM.O) and the trade group United Egg Producers Inc. Representatives at those companies and the trade group were not immediately available for comment.

"The aim of defendants' conspiracy was to conduct a supply control campaign designed to reduce output and artificially fix and inflate the price of eggs .. " the lawsuit contends. It says egg companies were able to drastically increase the price of eggs from 2000 to record highs by 2007 and into 2008 through the activity.

The lawsuit accuses egg producers of conspiring in various ways, including agreeing to delay or reduce chick hatching, agreeing to restrain output in the United States, manipulating the export of eggs to reduce supply and agreeing to manipulate the molting of hens to keep egg production low.

Under federal antitrust laws, competitors are not allowed to conspire for the purpose of altering prices.

There are some limited exceptions for agricultural producers, such as the Capper-Volstead Act, a 1922 law that allows for reduced competition among smaller farmers who form a co-operative, said Ted Bolema, an assistant professor of finance and law at Central Michigan University. He is not involved with the litigation.

"Our allegations are that the Capper-Volstead Act does not apply for several reasons," said one of the lawyers for the plaintiff, James Pizzirusso of law firm Cohen Milstein Hausfeld & Toll.

The plaintiffs argue that the United Egg Producers is a trade group and its activities fall outside the legitimate objectives of an agricultural marketing co-op, and that its members are competitors rather than small farmers banding together to cut out the middlemen who would otherwise market their eggs.

The plaintiff is demanding a jury trial, and wants the case certified as a class action on behalf of other egg buyers who bought directly from the producers.

The lawsuit seeks triple damages as well as other relief under federal antitrust laws, plus attorneys' fees and costs. (Reporting by Martha Graybow, editing by Brad Dorfman)