Revenge could also be a dish finest served chilly, however others would argue it can be served mashed, battered, and fried.
A number of proposed class motion lawsuits filed this week allege that 4 frozen potato producers—Cavendish Farms, Lamb Weston, McCain Meals, and the J.R. Simplot Firm—conspired and shared commerce data to coordinate value will increase in 2021.
In a grievance filed Friday, Pennsylvania grocery chain Redner’s Markets alleges that the 4 corporations illegally mounted costs for tater tots, french fries, and hash browns, gouging shoppers and business clients. And in a lawsuit filed Sunday, plaintiffs claimed the businesses engaged in antitrust practices through the use of information aggregation companies and shared entry to delicate data to artificially repair costs. From 2022 to 2024, costs of frozen potato merchandise elevated 47%, one lawsuit mentioned.
“Armed with the identical entry to one another’s information on pricing and different delicate data, in addition to with a direct line of communication to one another, the potato cartel strikes costs skyward in lockstep—harming all purchasers of potatoes within the course of,” plaintiff Alexander Govea mentioned in a single grievance.
The lawsuits emerge as shoppers proceed to wring their fingers over easy methods to afford weekly groceries, as world costs attain their highest in 18 months, with the UN Meals and Agriculture Group’s meals value index rising to 127.4 in October, a 5.5% improve from a 12 months in the past. About 75% of all Individuals are nervous concerning the value of meals and client items, in response to September Pew Analysis Heart information.
The 4 corporations make up about 97% of a U.S. frozen potato business value $68 billion yearly, one plaintiff acknowledged. Commerce affiliation Potatoes USA mentioned final month that demand for frozen merchandise stays regular, with retail greenback gross sales for frozen potatoes growing 14.6% from July 2023 to July 2024. As a result of the 4 corporations dominate the market, the lawsuits argue, there’s little room for smaller rivals to interrupt in and develop.
A McCain Meals spokesperson informed Fortune it “strongly disputes” the allegations outlined within the lawsuit. “McCain Meals intends to vigorously defend the lately filed lawsuits in order that it could possibly give attention to what we do finest: delivering prime quality, inexpensive meals to clients nationwide,” the assertion mentioned.
A Lamb Weston spokesperson informed Fortune, “We imagine the claims are with out benefit and intend to vigorously defend our place.”
The 2 different defendants didn’t reply to Fortune’s requests for remark.
How Huge Potato allegedly mashed competitors
The lawsuits allege the potato business is about as much as allow conspiracy by way of excessive limitations to enter the market and possessiveness over suppliers. Corporations like Lamb Weston, which might crank out 250 million kilos of frozen potato merchandise yearly at only one facility, require immense infrastructure that make it troublesome for up-and-comers to provide on a significant scale, argues Redner’s Markets. Cavendish Farms spent $430 million to open one processing plant.
Based on the lawsuit, the producers of frozen fries and tots declare shut relationships with farmers and demand that suppliers not tackle new purchasers, significantly as these giant corporations vie for long-term contracts. Potatoes are one of many most weak crops to the impacts of local weather change, in response to the Nationwide Institutes of Well being, and Lamb Weston argued there are few untapped assets obtainable to farm the crop.
However the penalties of the alleged price-fixing might be steep for the spud giants. Final month, McDonald’s sued beef producers, claiming 4 main meat packers inflated costs by lowering provide and arguing the meat business had grow to be a monopoly. A number of poultry heavyweights, together with Tyson Meals and Sanderson Farms, have confronted antitrust litigations and lawsuits courting again as early as 2016 for related claims.
Tyson beforehand coughed up $221.5 million to settle with plaintiffs.
