3 Min Read
(Reuters) - Top U.S. chicken companies Tyson Foods Inc (TSN.N) and Pilgrim's Pride Corp (PPC.O) said on Monday that Florida's attorney general sought information from them regarding a probe into possible anticompetitive behavior, widening a legal review into chicken pricing.
Florida Attorney General Pam Bondi's office has opened an investigation into allegations made in civil lawsuits, filed last year in federal court in Chicago, that Tyson and other chicken processors conspired to fix prices, Tyson spokesman Gary Mickelson said.
Shares of Tyson, the No. 1 U.S. meat processor, fell 6 percent to $59.48 after it reported a slump in quarterly profits. It also disclosed that Bondi's office had requested information from the company through a "civil investigative demand."
"We continue to believe the antitrust claims that prompted the Florida AG to open this investigation are without merit but we are cooperating with the Florida AG’s investigation," Mickelson said.
Pilgrim's Pride, mostly owned by Brazilian meatpacker JBS SA (JBSS3.SA), also received "an inquiry from Florida AG, similar to other chicken companies," spokesman Cameron Bruett said.
Pilgrim's Pride shares dropped 1.2 percent to $24.75.
Kylie Mason, Bondi's press secretary, declined to comment, citing an active investigation.
The U.S. chicken sector, which is dominated by a few large companies, has come under increased scrutiny over the past year as customers and farmers alleged antitrust violations relating to pricing, production and compensation.
Tyson said Bondi's office had requested information primarily related to the Georgia Dock, a pricing index for chicken products formerly published by the Georgia Department of Agriculture. State officials suspended the index last year amid concerns chicken companies could manipulate it.
Florida has also asked Sanderson Farms Inc (SAFM.O) for information relating to the index.
"It’s not uncommon to see state AGs investigate antitrust allegations made in civil cases that seek to collect damages on behalf of consumers within their states," said Mickelson.
Florida's request came after Tyson said in February it had received a subpoena from the Securities and Exchange Commission. The company, which has declined further comment on the SEC action, said at the time it believed the subpoena was related to allegations of price fixing.
Pivotal Research Group analyst Timothy Ramey said "the risk of a major finding of industry collusion is top of mind" due to the probes.
Net income attributable to Tyson declined to $340 million in the quarter ended April 1 from $432 million a year earlier.
Fires at two chicken plants and lower sales in Tyson's prepared foods segment weighed on results.
Additional reporting by Sruthi Ramakrishnan and Richa Naidu in Bengaluru; Editing by Bernard Orr and Tom Brown