A “potato cartel” has allegedly conspired to artificially hike costs on french fries and hash browns as they nook the $68 billion frozen spuds market, in keeping with a number of lawsuits.
After many years of consolidation, simply 4 corporations – Lamb Weston, Canada-based McCain Meals, the J.R. Simplot Firm and Cavendish Farms – management 97% of the market, in keeping with antitrust lawsuits filed within the US District Courtroom for the Northern District of Illinois in November.
Between July 2022 and July 2024, these tater titans despatched the worth of frozen potato merchandise hovering 47% by colluding to boost costs, in keeping with courtroom paperwork.
“When there are only a handful of players in the market, collusion is too appetizing for these companies to pass up,” Lindsay Owens, government director of financial suppose tank Groundwork Collaborative, informed The Washington Submit.
The businesses blamed the will increase on the rising price of operations, however the value of frozen potatoes remained excessive lengthy after working prices eased, the complaints claimed.
Marc Doucette, vice chairman of communications at Cavendish Farms, referred to as the allegations within the lawsuits “baseless.”
“We intend to vigorously defend ourselves against them,” Doucette informed The Submit on Friday.
The three different corporations talked about within the lawsuits didn’t instantly reply to requests for remark.
Since November, eating places and grocery shops have filed greater than a dozen class motion lawsuits arguing that the costs imposed by the “potato cartel” has crushed their backside traces.
Round 40% of all potatoes grown within the nation – or 17 billion kilos – are offered to frozen potato corporations every year, in keeping with the fits.
Lamb Weston and McCain management 70% of the market, whereas J.R. Simplot holds 20% and Cavendish Farms controls 7%, the lawsuits stated.
“All of these industries are trending toward duopolies — the model of Coke and Pepsi,” Philip Howard, a professor at Michigan State College who research focus in meals methods, informed The Lever, an investigative information web site.
Different sectors usually are not fairly as dangerous as Huge Potato’s 97% focus, however “a lot of industries are getting closer and closer to that,” Howard stated.
The 4 corporations had been colluding to repair costs since 2021, in keeping with the fits.
In April 2022, Josh Saltzman, the proprietor of a Washington, D.C. sports activities bar, stated he acquired a discover from his meals distributor that the 4 main suppliers had been every mountaineering their costs by 12 cents per pound. In a viral publish on social media, he joked: “Totally not collusion or anything, right?”
“It was just the most obvious example of collusion I’ve seen in a long time,” he informed The Lever. “All of them were raising their prices by virtually the exact same amount within a week of each other.”
The lawsuits declare the 4 corporations made near-identical value hikes a number of occasions all through 2021 and 2022. In some circumstances, the rival corporations made bulletins inside days of each other that they had been elevating costs, efficient on the identical dates, the fits stated.
Courtroom paperwork allege executives on the frozen potato corporations made feedback alluding to the worth fixing scheme, although it’s unclear when and the place the feedback had been made.
In 2023, a former McCain Meals director allegedly stated they wished to compete with Lamb Weston on pricing however had been informed to not by “higher ups in the room,” in keeping with the lawsuits.
That very same 12 months, a former Lamb Weston government stated rivals had been “behaving themselves” and that they’d “never seen margins this high in the history of the potato industry,” the complaints alleged.
In October 2023, Lamb Weston stated its web earnings had grown 111% because the 12 months earlier than, which the chief government attributed to “pricing actions,” in keeping with the fits.
It’s shocking that regulators allowed the frozen potato corporations to achieve such an awesome maintain available on the market, Howard stated.
“It’s interesting that even in a very permissive environment of mergers and acquisitions, this industry was allowed to get to the level that it has,” he informed The Lever.
