Case 1:24-cv-07017-TAM Document 1 Filed 10/04/24 Page 1 of 100 PageID #: 1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

MCDONALD’S CORPORATION,

Plaintiff,
COMPLAINT
v.
JURY TRIAL DEMANDED
CARGILL, INC., CARGILL MEAT SOLUTIONS
CORPORATION (a/k/a CARGILL PROTEIN), JBS S.A.,
JBS USA FOOD COMPANY, SWIFT BEEF COMPANY,
JBS PACKERLAND, INC., NATIONAL BEEF PACKING
COMPANY, TYSON FOODS, INC. and TYSON FRESH
MEATS, INC.,

Defendants.
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TABLE OF CONTENTS

Page

I. NATURE OF THIS ACTION........................................................................................1

II. JURISDICTION AND VENUE................................................................................... 11

III. PARTIES.................................................................................................................... 12
A. Plaintiff ........................................................................................................... 12
B. Defendants....................................................................................................... 13
C. Defendants and Their Subsidiaries and Affiliates .............................................. 17
D. Defendants’ Co-Conspirators............................................................................ 17
E. Reciprocal Agency of Defendants and Co-Conspirators..................................... 18
F. Defendant Parent and Subsidiary Companies Share a Unity of Interest............... 18

IV. INDUSTRY BACKGROUND..................................................................................... 25

V. DEFENDANTS’ ANTITRUST VIOLATIONS............................................................ 29

A. Direct Evidence of Defendants’ Conspiracy ...................................................... 30
B. The Available Data Corroborates Witness 1’s Account ...................................... 36
C. Operating Defendants Slash Production in 2015 ................................................ 42
D. Operating Defendants Continued to Artificially Limit Supply in 2016................ 47
E. After Historic Cuts, Operating Defendants Continued Restraining the
Supply of Beef, Resulting in Higher Beef Prices in 2017 and 2018 .................... 49
F. In 2019 and 2020, Operating Defendants Continued to Limit Slaughter, in
Parallel, Against Their Independent Self-Interest............................................... 51
G. Defendants Idled and Closed Plants, and Refrained From Expanding
Processing Capacity ......................................................................................... 54
H. Parallel Reductions in Cash Cattle Purchases and Anticompetitive
Queuing Conventions ....................................................................................... 56

VI. EFFECTS OF DEFENDANTS’ ANTITRUST VIOLATIONS ..................................... 58

A. Defendants’ Conspiracy Increased the Spread between Cattle and Beef
Prices .............................................................................................................. 58
B. Tyson Foods and, Jointly, JBS S.A. and JBS USA Falsely Claimed Their
Record Profits Were Due to Market Prescience, Not Supply Constraints ............ 61

VII. ADDITIONAL PLUS FACTORS SUPPORTING THE REASONABLE

INFERENCE OF DEFENDANTS’ CONSPIRACY ..................................................... 62

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A. Operating Defendants Signaled Their Conspiracy and Encouraged Each

Other to Maintain the Conspiracy ..................................................................... 62
B. The Beef Market is Highly Concentrated .......................................................... 64
C. The Beef Market Has High Barriers to Entry..................................................... 65
D. Beef is a Commodity Product ........................................................................... 66
E. The Demand for Beef is Inelastic ...................................................................... 67
F. Defendants Had Multiple Opportunities to Collude ........................................... 68
G. Defendants Exacerbated Their Supply Restraints by Continuing to Reduce
Their Imports ................................................................................................... 73
H. Defendants’ Market Share Stability is Indicative of a Conspiracy ...................... 74
I. The Production Cuts Were Implemented Despite Surging Beef Demand ............ 75

VIII. THE BEEF INDUSTRY FACES GOVERNMENTAL INQUIRIES AND

INVESTIGATIONS .................................................................................................... 77

IX. ANTITRUST INJURY................................................................................................ 79

X. DEFENDANTS FRAUDULENTLY CONCEALED THEIR CONSPIRACY ............... 81

B. Plaintiff’s Claims are Timely ............................................................................ 88
C. Plaintiff Exercised Due Diligence in Attempting to Discover their Claim ........... 89

XI. DEFENDANTS ENGAGED IN CONTINUING ANTITRUST VIOLATIONS ............ 90

A. Defendants Inflicted New and Accumulating Injury on Plaintiff ........................ 91

XII. VIOLATIONS OF SECTION 1 OF THE SHERMAN ACT, 15 U.S.C. § 1 ................... 93

XIII. REQUEST FOR RELIEF ............................................................................................ 96

XIV. JURY TRIAL DEMANDED ....................................................................................... 97

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Plaintiff McDonald’s Corporation (“Plaintiff” or “McDonald’s”) brings this action

against Defendants Cargill, Inc., Cargill Meat Solutions Corporations (a/k/a Cargill Protein)

(“CMS”), JBS S.A., JBS USA Food Company (“JBS USA”), Swift Beef Company (“Swift”), JBS

Packerland, Inc. (“Packerland”), National Beef Packing Company (“National Beef”), Tyson

Foods, Inc. (“Tyson Foods”), Tyson Fresh Meats, Inc. (“Tyson Fresh”) (collectively

“Defendants”), and unnamed co-conspirators, and for its Complaint against Defendants, Plaintiff

alleges as follows:

I. NATURE OF THIS ACTION

1. As alleged more fully below, beginning at a time uncertain, but at least as early as

approximately January 1, 2015, and continuing through the present and with an effect thereafter,

Defendants and their co-conspirators engaged in a contract, combination or conspiracy in restraint

of trade or commerce in violation of Section One of the Sherman Act. The goal of their conspiracy

was to fix, raise, stabilize and/or maintain the price of beef 1 sold to Plaintiff and others at supra-

competitive levels – that is, prices artificially higher than beef prices would have been in the

absence of their conspiracy. Defendants’ conspiracy was effective and achieved that goal.

Ascertaining the full scope and measure of the conspiracy will require discovery. However, as

alleged in this Complaint, Defendants and their co-conspirators implemented their conspiracy

through one or more anticompetitive means. For example, and without limitation, they

implemented their conspiracy by coordinating, manipulating, or agreeing to pay less than

competitive prices for the main or primary input in producing beef, namely, slaughter-ready cattle

1 In this Complaint, “beef” includes boxed and case-ready meat processed by Defendants and other
smaller, non-Defendant producers from fed cattle, including primal cuts, trim or sub-primal products,
further-processed and value-added products, offal or variety products, and rendered products and by
products. “Beef” also includes ground beef to the extent that it is processed, in whole or in part, from fed
cattle. “Fed cattle” means steers and heifers raised in feedlots on concentrated diets to be produced and
sold as beef.

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(i.e., fed cattle), for the purpose and with the effect of fixing, increasing, stabilizing or maintaining

above competitive levels their margins on, and the price of beef sold to, Plaintiff and others.

Additionally, or in the alternative, as a further example, Defendants and their co-conspirators

implemented their conspiracy by collusively reducing the slaughter-ready cattle and beef supply,

which over time artificially elevated the price of beef that they sold to Plaintiff and others.

2. Plaintiff, through its assignors, purchased beef in the United States directly

from one or more of the Defendants and co-conspirators, from at least January 1, 2015, until the

present (the “Conspiracy Period”).

3. Defendants are the world’s largest meat processing and packing companies,

known in the industry as meatpackers or packers. In 2018, Defendants (Tyson Fresh, CMS,

Swift/Packerland, and National Beef) (collectively “Operating Defendants”) sold approximately

80% of the more than 25 million pounds of fresh and frozen beef supplied to the U.S. market.

Collectively, they controlled approximately 81–85% of the domestic market-ready fed cattle

processed (or slaughtered) during the Conspiracy Period. 2 The next largest, non-Defendant

meatpacker had only a 2–3% market share.

4. The U.S. Department of Justice (“DOJ”) and U.S. Department of

Agriculture (“USDA”) have launched investigations into whether Defendants fixed beef prices in

the United States. In June 2020, news sources reported that the DOJ’s Antitrust Division sent civil

subpoenas to Defendants Tyson Foods, JBS S.A., and Cargill, Inc., and to National Beef Inc. (a

company related to Defendant National Beef) seeking information relating to their pricing

practices dating back to January 2015.

2 In 1977, the largest four beef-packing firms controlled just 25% of the market, compared to 85% of the
market by 2018.

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5. The DOJ’s investigation followed a March 12, 2020, Senate Subcommittee

hearing,3 during which Secretary of Agriculture Sonny Perdue announced that the USDA had

begun an investigation into suspiciously high beef prices. Secretary Perdue expressed concern that

meatpackers, such as Defendants, were paying lower prices for cattle without passing the cost

savings on to beef purchasers such as Plaintiff. As he explained, the difference between prices for

live cattle and prices for wholesale beef was “historically high.”

6. The Government’s concern over the impact of Defendants’ anticompetitive

conduct in the cattle and beef market was laid bare in a June 1, 2021 letter from 26 U.S. Senators

to the DOJ. In that letter, the Senators asked “the government to determine whether the

stranglehold large meatpackers have over the beef processing market violates our antitrust laws

and principles of fair competition.” They described Defendants’ actions as follows: “From our

perspective, the anticompetitive practices occurring in the industry today are unambiguous and

either our antitrust laws are not being enforced or they are not capable of addressing the apparent

oligopoly that so plainly exists.” The letter also noted that “[f]or far too long, cattle producers and

consumers have been hurt by the increasing concentration of market power and anticompetitive

actions of just a few meatpacking companies. Their collective power over the cattle and beef

processing industry allows them to seemingly control prices at their will.” The Senators requested

the DOJ and the USDA to investigate potential market manipulation and other illegal activity by

Defendants.

7. Plaintiff understands from unsealed information and court filings in the

litigation brought by cattle ranchers 4 that a confidential witness (“Witness 1”), who was previously

3 The March 12, 2020, hearing was before the Senate Subcommittee on Agriculture, Rural Development,
Food and Drug Administration, and Related Agencies.
4 Plaintiff’s allegations relating to Witness 1 and Witness 2 set forth in this Complaint are made upon
information and belief based on allegations contained in the Third Consolidated Amended Class Action

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employed by Defendant Swift at its Cactus, TX plant has confirmed the existence of a conspiracy

among the Operating Defendants (the principal operating entities of Defendants, as identified in

the descriptions of Defendants alleged below).

8. Witness 1, who has been identified as Jason F., confirmed that all the

Defendants agreed to reduce their cattle purchases and slaughter volumes for the purpose and effect

of increasing their margins (i.e., the spread between what Defendants pay cattle ranchers for fed

cattle and the price they charge Plaintiff, through its assignors, and other direct purchasers for

beef). Defendants’ transactional data and slaughter volume records, information published by the

USDA, and Defendants’ public calls for industry-wide slaughter and capacity reductions ,

corroborate Witness 1’s account of Defendants’ anticompetitive agreement.

9. In addition to the high concentration in the wholesale beef industry,5 other

structural characteristics of the domestic beef market facilitated Defendants’ conspiracy. For

example, Operating Defendants sit atop the supply and distribution chain that ultimately delivers

beef to the market. More specifically, Defendants purchase cattle from the nation’s feedlots,

slaughter and pack cattle into beef, and ultimately sell beef to beef purchasers such as Plaintiff,

through its assignors. Operating Defendants’ have exploited their pivotal role in the process of

buying cattle to produce beef to collusively control upstream cattle pricing and downstream beef

pricing during the Conspiracy Period.

Complaint filed in the District of Minnesota and the Court’s Order denying Defendants’ motion to dismiss.
Ranchers Cattlemen Action Legal Fund, et al. v. Tyson Foods, et al., No. 19-1222, Dkt. 312 (D. Minn.); In
re Cattle Antitrust Litigation, No. 20-cv-1319, Dkt. 238 (denying motions to dismiss, based, at least in part,
on similar allegations relating to Witness 1 and 2).
5 According to the Senators’ June 2021 letter to the DOJ, “The U.S. meatpacking industry is more
consolidated today than it was in 1921 when the Packers and Stockyards Act was enacted. Four companies
operate 18 of the top 20 beef slaughter facilities in this country, which constitutes 94% of this capacity.”

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10. Other market characteristics serve as “plus factors” supporting the inference

that Defendants conspired during the Conspiracy Period. As explained more fully below, these

characteristics include producer concentration, high barriers to entry, inelastic demand, the

commodity nature of beef, frequent opportunities to conspire, strong demand, and/or market share

stability. These economic factors made the market for the production and sale of beef conducive

to cartelization.

11. Defendants’ increased profit margins during the Conspiracy Period were

aided by the way supply and demand operate in the beef industry. The supply of cattle is

insensitive to short-term price changes because of the long lifecycle of cattle, cattle’s perishable

nature, and the lack of any alternative use for cattle. Beef demand is also relatively insensitive to

price fluctuations. As a result, Operating Defendants’ margins were (and are) very responsive to

changes in the aggregate volume of slaughtered cattle.

12. Another form of interaction conducive to Defendants’ collusion was

frequent meetings between each other’s executives and key employees. Trade association

conferences and other industry events offered convenient opportunities to exchange information,

plans and strategies, and to build relationships. As described throughout this Complaint, Operating

Defendants seized these opportunities to advance their collusive supply restrictions.

13. As alleged in detail below, by at least the beginning of 2015, Defendants

began exploiting favorable market conditions to launch their conspiracy. More specifically,

Defendants began to coordinate on the prices they would pay for fed cattle. They also coordinated

on their respective cattle slaughter volumes. Thus, over time, the output of beef was reduced

resulting in higher beef prices for purchasers like Plaintiff, through its assignors, during the

Conspiracy Period. Industry data shows Operating Defendants’ transition from competition to

collusion by managing the price of fed cattle and the industry slaughter volumes. Joint

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management of their respective slaughter volumes during the Conspiracy Period is shown in Figure

1 below, which tracks their quarterly slaughter volumes and shows them moving in tandem.

Figure 1

14. The results of Defendants’ agreement to coordinate slaughter reductions

and volume are illustrated in Figures 2 and 3 below. Figure 2 compares the average annual beef

cattle slaughter by Operating Defendants and the smaller, non-defendant beef producers in the

market before the Conspiracy Period (2007–2014) to the same average during the first five years

of the Conspiracy Period (2015–2019), the years for which data is available.

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15. Figure 3 also compares the Operating Defendants’ and the Independent

Packers’ annual slaughter volumes during the Conspiracy Period and the pre-Conspiracy Period,

but breaks out the slaughter volume for each year of the Conspiracy Period for which data is

available. (“Independent Packers” are packers that operate independently of and are not affiliated

with Defendants.) The graph confirms that Tyson Fresh, Swift/Packerland, CMS, and National

Beef each slaughtered fewer fed cattle in every year in the Conspiracy Period compared to their

pre-Conspiracy Period averages. It also shows that while Tyson Fresh, Swift/Packerland, CMS,

and National Beef each gradually increased its slaughter volume from 2016 after its 2015

reductions, as the supply of fed cattle increased, the rate of increase of each of these Defendants

was outpaced by the slaughter volume increases of Independent Packers during the same period. 6

6 National Beef acquired Iowa Premium in June 2019, adding 300,000 head to its annual fed cattle
slaughter volume. Absent that acquisition, its year-on-year slaughter volume was flat against 2018,
while Independent Packers’ collective slaughter volume rose by approximately 100,000 head (netting
out National Beef’s acquisition of Iowa Premium).

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Operating Defendants thus used periodic slaughter reductions and underutilized plant capacity to

ensure their supply of beef never outstripped demand.

Figure 3.
Average Pre- & Post-Conspiracy Period Fed Cattle Slaughter-Operating Defendant
vs. Others

16. These figures demonstrate that each Operating Defendant family curtailed

its annual slaughter volumes during the Conspiracy Period, while the smaller beef processors

collectively increased their slaughter volumes during the same period without making up the

shortfall of beef created by the conspiracy.

17. As a consequence of Operating Defendants’ reduced supply, the beef

market experienced a change of price behavior. Before 2015, prices of cattle and beef predictably

moved in tandem. That correlation was the result of a natural economic relationship in a

competitive market because beef is simply processed cattle.

18. But, beginning in approximately 2015, this fundamental economic

relationship between cattle and beef prices changed. The degree of correlation of cattle and beef

prices diverged (to Operating Defendants’ benefit) without any credible, non-collus ive

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explanation. The relevant supply and demand factors in the industry no longer explained the prices

charged to direct purchasers such as Plaintiff, through its assignors.

19. Starting in 2015, the margins earned on beef sales sold directly to

purchasers, such as Plaintiff, through its assignors, began to show trends that can now be seen as

unusual. The per-pound price of cattle had historically stayed within 20 to 40 dollars of the per-

pound average wholesale price of beef. However, in 2015, the spread between those prices

increased significantly, as demonstrated by Figure 4 and Figure 5 below.

Figure 5

Farm to Wholesale Price

Years Proportional Increase
Spread

2010 - 2014 $34.10

2015 - 2019 $60.20 77%

2020 $122.00 103%

2021 $156.50 28%

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20. According to USDA Economic Research Service data, the average spread

between the average farm value of cattle and wholesale value of beef was substantially higher from

January 2015 through 2021 than during the preceding five years. From 2010, to 2014, the average

farm-to-wholesale spread was about $34. But from 2015 to 2021, the average spread was about

$82.78—a 143% increase. The spread continued to balloon: by 2020 reaching about $71, a 109%

increase from the pre-conspiracy period average.

21. Operating Defendants’ ability to reduce the prices of fed cattle over time

while maintaining inflated beef prices during the Conspiracy Period provides compelling ,

circumstantial evidence of their conspiracy. In a competitive beef market, if a competitor reduces

its price paid for fed cattle, then other competitors would be expected to increase purchases, so

they could boost output and increase their profit and market shares.

22. Only colluding meatpackers would expect to benefit by reducing their

prices and purchases of slaughtered cattle because they would know that their conspiracy would

shield them from the dynamics of a competitive marketplace. By collusively underpaying suppliers

for fed cattle, and over time reducing beef output, Defendants have been able to increase their

margins and profits, confident that none of them would take volume from each other.

23. United by their conspiracy, Operating Defendants were confident that none

of them would defect and disproportionately expand their beef production to satisfy unmet

demand. Armed with this assurance, Operating Defendants achieved unprecedented meat margins

(i.e., the gap between what they paid for cattle and what they charged for beef sold to direct

purchasers like Plaintiff, through its assignors).

24. For example, by the end of 2021, the two largest Defendants, Tyson Foods

and JBS USA, were reporting record margins or net revenue in their beef business. Tyson Foods

reported that its beef business’ operating margin was nearly 18% percent—nearly nine times its

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2014 operating margin of 2.1%. Meanwhile, JBS USA reported net revenue of $27.18 billion in

2021, which is a 25.8% increase of the $21.6 billion of net revenue it reported for its beef

operations in 2014.

25. Given these bloated margins, it is unsurprising that a leading industry

reporter remarked that Defendants “no longer compete against each other,” which has enabled

them to reap “gangbuster profits.” 7

26. In summary, Defendants colluded during the Conspiracy Period to reduce

supplies of beef in tandem, thereby raising and fixing beef prices at levels higher than prices that

would have prevailed had the beef market been competitive. As a direct result, Plaintiff suffered

antitrust injury by paying illegally inflated prices for beef it purchased from Defendants.

II. JURISDICTION AND VENUE

27. Plaintiff brings this action under Sections 4(a) and 16 of the Clayton Act,

15 U.S.C. §§ 15(a) and 26, to secure damages and injunctive relief for Defendants’ violations of

Section 1 of the Sherman Act, 15 U.S.C. § 1.

28. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1337

and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a) and 26.

29. Venue is proper in this District under Sections 4, 12, and 16 of the Clayton

Act, 15 U.S.C. §§ 15, 22, and 26, and 28 U.S.C. § 1391(b), (c) and (d) because one or more

Defendants reside in, are found in, transacted business in, or have an agent who transacted business

in this District and because a substantial portion of the affected interstate commerce was carried

out here.

7 Cassandra Fish, “Whatever Happened to a Fair Fight,” The Beef (Nov. 10, 2015),
https://www.thebeefread.com/2015/11/10/whatever-happened-to-a-fair-fight/.

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30. This Court has personal jurisdiction over each of the Defendants because,

among other reasons, each Defendant: (a) inhabits, transacts business in, has continued or

systematic contacts with, or is found in this District; (b) has sufficient minimum contacts in the

United States sufficient to satisfy due process; (c) manufactured, sold, shipped, and delivered or

directed the manufacture, sale, shipment, and delivery of substantial quantities of beef throughout

the United States, including in this District; (d) belonged to the conspiracy alleged in this

Complaint, and one or more of them, and their co-conspirators, performed unlawful acts in

furtherance of the conspiracy in this District, including, without limitation, selling beef to Plaintiff,

through its assignors, and others in this District at artificially inflated prices; and/or (e) engaged in

unlawful conduct that was directed at, and had a direct, substantial, foreseeable, and intended effect

of causing injury to, interstate and foreign commerce and the business or property of persons

residing in, located in, or doing business throughout the United States, including in this District.

III. PARTIES

A. Plaintiff
31. Plaintiff McDonald’s Corporation is a Delaware Corporation with its

principal place of business in Chicago, Illinois. Plaintiff has established a global quick-service

restaurant business operating under the McDonald’s brand with over 39,000 restaurants in over

100 countries, including over 13,000 in the United States. McDonald’s brings this action pursuant

to assignments with OSI Group, LLC, Dorada Poultry LLC, Lopez Foods, Inc., DeOro Foods LLC,

The HAVI Group LP, HAVI Global Solutions, LLC, Golden State Foods Corp., Fulton Market

Group, LLC and Fulton Market Group Australia Unit Trust, and their affiliates and predecessors

with respect to direct purchases made in the United States for McDonald’s company-owned,

franchised and developmental licensee locations in the United States, U.S. territories, and Latin

America. OSI Group, LLC, Dorada Poultry LLC, Lopez Foods, Inc., DeOro Foods LLC, The

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HAVI Group LP, HAVI Global Solutions, LLC, Golden State Foods Corp., and Fulton Market

Group, LLC on behalf of themselves and their affiliates and predecessors, have assigned federal

antitrust claims based on those direct purchases to McDonald’s.

32. During the Conspiracy Period, Plaintiff, through its assignors, purchased

beef at artificially inflated prices directly from one or more Defendants, and their affiliates and co-

conspirators, and suffered injury to their businesses or property as a direct or proximate result of

Defendants’ wrongful conduct. Plaintiff has therefore suffered antitrust injury as a direct result of

the antitrust violations alleged in this Complaint.

B. Defendants

1. The Cargill Defendants

33. Defendant Cargill, Inc. is a privately held Delaware corporation with its

principal place of business at 15407 McGinty Road, Wayzata, Minnesota 55391. During the

Conspiracy Period, Cargill, Inc. and/or its predecessors, wholly owned or controlled subsidiaries,

or affiliates sold beef in interstate commerce, directly or through Cargill, Inc.’s wholly owned or

controlled affiliates, to purchasers in the United States. Cargill, Inc. is the parent company.

34. Defendant Cargill Meat Solutions Corporation (a/k/a Cargill Protein) (a/k/a

Cargill Protein – North America) (“CMS”) is a wholly owned Cargill, Inc. subsidiary. CMS is a

Delaware corporation with its principal place of business at 825 East Douglas Avenue, Wichita,

Kansas 67202. CMS is the principal operating entity within Cargill, Inc.’s U.S. cattle and beef

business and is a wholly owned subsidiary of Cargill, Inc. On information and belief, CMS owns

directly, or indirectly through its subsidiaries, Cargill, Inc.’s U.S. fed cattle slaughter plants, and

contracts for the purchase of cattle slaughtered there.

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35. During the Conspiracy Period, Cargill, Inc. wholly owned, as a direct or

indirect subsidiary, CMS and sold, along with CMS, beef in interstate commerce, directly or

through this wholly owned or controlled affiliate, to purchasers in the United States.

36. During the Conspiracy Period, Cargill, Inc. and CMS shared a unity of

corporate interest and operated as part of a single enterprise in furtherance of the conspiracy that

purposefully directed conduct causing injury to and derived direct benefit from Plaintiff in the

United States and this District.

2. The JBS Defendants

37. Defendant JBS S.A. is a Brazilian corporation with its principal place of

business at Av. Marginal Direta do Tiete, 500 Bloco 3-30 andar, Vila Jaguara, Sao Paulo 05.118-

100, Brazil. During the Conspiracy Period, JBS S.A. and/or its predecessors, wholly owned or

controlled subsidiaries, or affiliates sold beef in interstate commerce, directly or through JBS

S.A.’s wholly owned or controlled affiliates, to purchasers in the United States. JBS S.A. is the

parent company.

38. JBS USA Food Company (“JBS USA”) is a Delaware corporation with its

principal place of business at 1770 Promontory Circle, Greeley, Colorado 80634. JBS USA is the

principal operating entity of JBS S.A.’s U.S. cattle-and-beef business. On information and belief,

it is the principal operating entity within JBS S.A.’s United States cattle and beef business and the

contracting entity for certain of JBS S.A.’s purchases of fed cattle in the United States.

39. Defendant Swift Beef Company (“Swift”) is a Delaware corporation with

its principal place of business at 1770 Promontory Circle, Greeley, Colorado 80634. Swift owns

directly, or indirectly through its subsidiaries, certain of JBS S.A.’s United States fed cattle

slaughter plants including the Cactus, Texas; Greeley, Colorado; Grand Island, Nebraska; and

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Hyrum, Utah plants. On information and belief, Swift contracts for the majority of fed cattle to be

slaughtered at these plants.

40. Defendant JBS Packerland, Inc. (“Packerland”) is a Delaware corporation

with its principal place of business at 1770 Promontory Circle, Greeley, Colorado 80634.

41. On information and belief, Packerland owns directly, or indirectly through

its subsidiaries, certain of JBS S.A.’s United States fed and dairy cattle slaughter plants, including

the Packerland packing plants in Green Bay, Wisconsin and Plainwell, Michigan, the Sun Land

beef plant in Tolleson, Arizona, and the Moyer Packing plant in Souderton, Pennsylvania. On

information and belief, Packerland contracts for the majority of fed cattle to be slaughtered at these

plants. Packerland operates a Regional Beef business unit.

42. Various senior staff and executives responsible for the operation of JBS

S.A.’s United States fed cattle and beef business during the Conspiracy Period were employed by

each of JBS USA, Swift, and Packerland. 8

43. Throughout the Conspiracy Period, the JBS Defendants sold beef in

interstate commerce, directly or through wholly owned or controlled affiliates, to purchasers in the

United States.

44. During the Conspiracy Period, the JBS Defendants shared a unity of

corporate interest and operated as part of a single enterprise in furtherance of the conspiracy

alleged in this Complaint that purposefully directed conduct causing injury to and derived direct

benefit from Plaintiff in the United States and in this District.

8 See JBS USA’s, Swift’s, and Packerland’s September 25, 2020 Updated Disclosures Pursuant to
Attachment 1 of ECF No. 187 in Peterson, et al. v. JBS USA Food Company Holdings, et al., Case No. 19-
cv-1129, at 3-7, 12-13.

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3. The Tyson Defendants

45. Tyson Foods, Inc. (“Tyson Foods”) is a publicly traded Delaware

corporation headquartered in Springdale, Arkansas. During the Conspiracy Period, Tyson Foods

and/or its predecessors, wholly owned or controlled subsidiaries, or affiliates sold beef in interstate

commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United

States.

46. Defendant Tyson Fresh Meats, Inc. (“Tyson Fresh” and together with Tyson

Foods the “Tyson Defendants”) is a wholly owned subsidiary of Tyson Foods. Tyson Fresh is a

Delaware corporation with its principal place of business at 800 Stevens Port Drive, Dakota Dunes,

South Dakota 57049. Tyson Fresh is the principal operating entity within Tyson Foods’ U.S. cattle

and beef business.

47. On information and belief, Tyson Fresh owns directly, or indirectly through

its subsidiaries, Tyson Foods’ U.S. fed cattle slaughter plants and contracts for the purchase of

cattle slaughtered there.

48. During the Conspiracy Period, Tyson Foods wholly owned as a direct or

indirect subsidiary, Tyson Fresh and sold, along with Tyson Fresh, beef in interstate commerce,

directly or through this wholly owned or controlled affiliate, to purchasers in the United States.

49. During the Conspiracy Period, the Tyson Defendants shared a unity of

corporate interest and operated as part of a single enterprise in furtherance of the conspiracy

alleged in this complaint that purposefully directed conduct causing injury to and derived direct

benefit from Plaintiff in the United States and in this District.

4. National Beef Packing Company

50. National Beef Packing Company LLC (“National Beef”) is a privately

owned Delaware limited liability company with its principal place of business located at 12200

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North Ambassador Drive, Suite 500, Kansas City, Missouri 64163. National Beef and/or its

predecessors, wholly owned or controlled subsidiaries, or affiliates sold beef in interstate

commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United

States.

51. On information and belief, National Beef owns directly, or indirectly

through its subsidiaries, National Beef’s U.S. fed cattle slaughter plants and contracts for the

purchase of cattle slaughtered there.

C. Defendants and Their Subsidiaries and Affiliates

52. “Defendants” includes all Defendants’ predecessors, including beef

meatpackers merged with or acquired by any Defendant and each Defendant’s wholly owned or

controlled subsidiaries or affiliates that sold beef in interstate commerce directly to purchasers in

the United States during the Conspiracy Period.

53. Each of the Defendants sold or distributed beef to direct purchasers or

played a material role in the coordinated and collusive behavior alleged. All Defendants were

active, knowing participants in the conspiracy alleged, and their conduct, to the extent committed

by the Operating Defendants, was known to and approved by their parent Defendants.

D. Defendants’ Co-Conspirators
54. Unknown persons, firms, and entities not named as Defendants in this

Complaint participated as co-conspirators with Defendants and performed acts and made

statements in furtherance of Defendants’ conspiracy. Defendants are jointly and severally liable

for the acts of their co-conspirators, regardless of whether or not Plaintiff has named these co-

conspirators as defendants.

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E. Reciprocal Agency of Defendants and Co-Conspirators

55. Each Defendant and co-conspirator acted by or through its officers,

directors, agents, employees, or representatives while actively engaged in the management,

direction, control, or transaction of the company’s business or affairs.

56. Each Defendant and co-conspirator acted as the agent or joint-venturer of

the other Defendants and co-conspirators with respect to the acts, violations, and common course

of conduct Plaintiff alleges in this Complaint.

F. Defendant Parent and Subsidiary Companies Share a Unity of Intere st

57. During the Conspiracy Period, the coordinated activity of a parent and its

wholly owned subsidiary is viewed as that of a single enterprise for purposes of Section 1 of the

Sherman Act.

58. A parent and its wholly owned subsidiary have a complete unity of interest

and purpose. Their objectives are common, not disparate, and their general corporate actions are

guided or determined not by two, separate corporate consciousnesses, but by one. Accordingly,

the coordinated activity of a parent and its wholly owned subsidiary is viewed as that of a single

enterprise.

59. A parent and its wholly owned subsidiary always have a unity of purpose

and thus act as a single enterprise whenever they engage in coordinated activity.

60. By controlling, dictating, or encouraging their subsidiaries’ anticompetitive

conduct in advancement of a common scheme for an illegal and anticompetitive purpose, the

parent Defendants independently participated in the illegal enterprise that they entered with their

subsidiaries. In doing so, the parent Defendants engaged in sufficient independent participation in

the conspiracy and had sufficient knowledge, intent, and involvement in Operating Defendants’

conspiracy to be liable under the Sherman Act as a single enterprise with their subsidiaries.

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61. During the Conspiracy Period, the parent Defendants shared a unity of

corporate interest and operated as part of a single enterprise with their subsidiaries, the Operating

Defendants, to advance their conspiracy.

1. The Cargill Defendants

62. Rather than owning and operating subsidiaries to diversify risk and earn

profits by investing in them, Cargill, Inc. formed subsidiaries to conduct business that it otherwise

would have conducted itself. To this end, Cargill, Inc. created CMS to conduct its business in the

meat industry that Cargill, Inc. previously operated itself.

63. Cargill, Inc. presents itself and its subsidiaries to the public as a single

unified enterprise. For example, in its Letter to Stakeholders included in Cargill’s 2021 Annual

Report, it explains, in a section entitled “How we work,” that “[o]ur integrated operating approach

enables our businesses to provide industry-leading products and services in their specific sections

while also drawing on the full work of Cargill’s expertise.” Additionally, on its website, Cargill,

Inc. reports that it employs 155,000 workers in 70 countries. Plaintiff is informed and therefore

believes and alleges that these numbers include CMS employees. Cargill, Inc. has also publicly

announced consolidated revenues, earnings, and cash flow that Plaintiff believes include

performance results from CMS’s beef operations.

64. In the Letter to Stakeholders included in Cargill, Inc.’s 2019 Annual Report,

Cargill, Inc. reported that it “delivered $2.82 billion in adjusted operating earnings in fiscal 2019.

Revenues dipped 1% to $113.5 billion. Cash flow from operations totaled $5.19 billion.” On

information and belief, those statistics include earnings, revenues, and cash flows from all Cargill,

Inc. subsidiaries as well as Cargill, Inc. itself. In the same document, Cargill, Inc. reported that its

“[e]arnings were led by our North American protein businesses. With steady domestic and export

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demand, and plentiful cattle supplies, the beef business posted its third consecutive year of strong

performance.”

65. A single unified system processes both companies’ purchase orders, which

further demonstrates the relationship between Cargill, Inc. and CMS.

66. Further, Cargill, Inc. operates other business services, including information

technology, human resources, finance, transportation and logistics, and procurement, with and for

CMS.

67. Cargill, Inc. plays an active role in managing CMS’s business operations.

For example, Cargill, Inc.’s 2021 Annual Report states that its Executive Team is responsible for

the company’s “strategic direction, talent development and overall financial performance” and that

it is “[l]ed by Board chairman and CEO, David MacLennan...”

68. As another example, Cargill, Inc. describes the responsibilities of executive

team member, Brian Sikes, as including “leading Cargill’s global protein and salt businesses,”

overseeing “Cargill’s protein business in North America and Europe,” and leading “the

transformation of the North American protein business.” Mr. Sikes lives in Wichita, Kansas, the

principal place of business of CMS.

69. Further, Cargill, Inc.’s slaughter plants in Fresno, California, Wyalusing,

Pennsylvania, and Friona, Texas all list either “Cargill” or “Cargill Beef” as d/b/a’s with the USDA

Food Safety Inspection Service.

70. Cargill, Inc.’s extensive involvement in CMS’s management and operations

demonstrates these entities’ unity of purpose (e.g., to profit from their price fixing) and common

objectives. Cargill, Inc.’s extensive involvement in CMS’s management and operations

demonstrates that Cargill, Inc. does far more than provide long-term strategy or guidance to CMS.

Cargill, Inc. created CMS as its instrumentality to execute Cargill, Inc.’s directives. Throughout

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the Conspiracy Period, Cargill, Inc. exerted, and had the right to exert, control over CMS. In this

manner, Cargill, Inc. independently participated in the illegal enterprise with CMS and, as a result,

has sufficient knowledge, intent, and involvement in Defendants’ conspiracy to be found liable

under the Sherman Act with CMS as a single enterprise.

2. The JBS Defendants

71. JBS S.A. is not merely a holding company whose business is restricted to

investments in operating subsidiaries. JBS S.A. established or acquired subsidiaries, including JBS

USA (which it formed), Swift (which it acquired), and Packerland (which it acquired), to conduct

its business, including the purchase and processing of cattle and the sale of beef. Had JBS S.A. not

created or acquired these subsidiaries, it would have performed these functions itself.

72. JBS S.A. presents itself as a unified enterprise and conducts consolidated

earnings calls on which its corporate representatives discuss the operations and profits of JBS S.A.,

including JBS USA, Swift, and Packerland. On these calls, JBS S.A. executives have described

the beef business it conducts through JBS USA, which it refers to as “JBS beef,” as a “division”

or “business unit.” JBS S.A. states on its website that it “produces and sells beef through two

Business Units: Friboi, in Brazil, and JBS USA Beef.” As reported on JBS USA’s financial

statements, JBS USA “conducts its United States beef and pork processing businesses through its

wholly-owned subsidiaries Swift Beef Company (‘Swift Beef’), Swift Pork Company (‘Swift

Pork’) and JBS Packerland, Inc.”

73. During the Conspiracy Period, JBS USA’s CEO and President reported

directly to JBS S.A.’s President, Chief Executive of Global Operations, and CEO.

74. Operating Defendants Swift and Packerland are fully integrated into the JBS

USA enterprise. They rest under the complete control of JBS USA, and in turn, JBS S.A. JBS USA

directs and oversees all JBS’s U.S. cattle procurement, beef processing, and sales operations, with

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ultimate direction from JBS S.A. JBS USA’s financial statements are replete with references to

notes, loans, and credit facilities that “are guaranteed by our Parent, JBS S.A.”

75. The career progression of Wesley Batista Filho clearly demonstrates the

level of control JBS S.A. maintains over its subsidiaries, as JBS S.A. installed Wesley Batista

Filho into whatever subsidiary they wished, at whatever level they wished, whenever they wished.

Wesley Batista Filho is the son of former JBS S.A. CEO Wesley Batista, and the grandson of

founder Jose Batista Sabrinho. Wesley Batista Filho’s grooming to become the next Batista to lead

JBS S.A. began with a position as a trainee in the JBS USA beef plant in Greeley, Colorado. He

then returned to Brazil, where he worked for JBS S.A. in a variety of roles. Soon after, he became

Head of JBS Uruguay, and then Head of JBS Paraguay. He was next installed as Head of JBS

Canada. After that, he was made Head of Fed Beef for JBS USA and President of JBS USA and

Swift Beef. Now, he is president of all JBS operations in South America.

76. Credit rating agencies have also factored in rating JBS USA in connection

with issuance of notes guaranteed by JBS USA’s parent, JBS S.A. For example, credit rating

agency Moody’s recently reported that JBS USA was a co-issuer (along with two other JBS related

entities) of proposed $500 million senior unsecured 10-year notes to be guaranteed by the parent,

JBS S.A.

77. Swift’s and JBS Packerland’s packing operations are presented as those of

JBS USA. For example, they appear on USDA’s list of Bonded Packers as “JBS USA Food

Company, Swift Beef Company” and “JBS USA Food Company, JBS Packerland, Inc.,”

respectively. The USDA’s Food Safety and Inspection Service’s Inspection Directory lists “JBS,”

“JBS USA,” and “JBS USA Food Company” among other d/b/a’s for Swift.

78. JBS S.A.’s extensive involvement in JBS USA’s, Swift’s, and Packerland’s

management and operations demonstrates these entities’ unity of purpose (e.g., to profit from their

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price fixing) and common objectives. JBS S.A.’s extensive involvement in JBS USA’s, Swift’s,

and Packerland’s management and operations also reveals that these entities’ general corporate

actions are guided and determined by one corporate consciousness. JBS S.A. does more than

provide long-term strategy and guidance to JBS USA, Swift, and Packerland. The entire purpose

of these subsidiaries is to serve as instrumentalities by executing JBS S.A.’s directives within the

greater JBS enterprise. Throughout the Conspiracy Period, JBS S.A. exerted, and had the right to

exert, total control over JBS USA, Swift, and Packerland. In this manner, JBS S.A. independently

participated in the illegal enterprise with JBS USA’s, Swift’s, and Packerland’s and, as a result,

has sufficient knowledge, intent, and involvement in Defendants’ conspiracy to be found liable

under the Sherman Act with JBS USA’s, Swift’s, and Packerland’s as a single enterprise.

3. The Tyson Defendants

79. Tyson Foods is not a mere holding company whose business is restricted to

investments in operating subsidiaries. Rather, Tyson Foods formed subsidiaries to act as its agents

and representatives to conduct business activities that Tyson Foods otherwise would have

conducted. With respect to Tyson Foods’ subsidiary Tyson Fresh, those activities include

purchasing and processing cattle and selling beef.

80. Tyson Foods holds itself out to the public as a single unified enterprise,

describing the beef business it conducts through Tyson Fresh as a mere “business unit.” Indeed,

before Noel White became Tyson Foods’ CEO (now former CEO), he was “group president of

Tyson’s Fresh Meats business unit.”

81. On its quarterly earnings calls, Tyson Foods’ corporate representatives

include Tyson Fresh when discussing the company’s financial performance. On these calls, Tyson

Foods announces operating income and returns on sales from its beef segment business that Tyson

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Fresh operates. More specifically, on these calls Tyson Foods attributes improved returns to

actions taken at plants that Tyson Fresh owns and operates.

82. During a January 31, 2014 earnings call, Tyson Foods management

employees explained to investors that Tyson Foods had generated $58 million in operating income

and a 1.6% return on sales from its beef segment business, despite that business being operated

directly by Tyson Fresh Meats. On the same call, Tyson Foods’ managers stated that “as the calf

crop declines . . . we’ll probably have to curtail production.” Production of the beef from the calf

crop is an activity undertaken by Tyson Fresh.

83. On other earning calls, Tyson Foods has described actions taken by Tyson

Fresh to advance Defendants’ conspiracy. For example, on its August 3, 2015, earnings call, Tyson

Foods explained its strategy for cattle purchasing implemented by Tyson Fresh as “we run for

margin and not for market share, we’re not willing to overpay for cattle and we’ve had to cut back

on our hours at our plants resulting in inefficiencies and added costs.”

84. Similarly, on Tyson Foods’ May 7, 2018, earnings call, with respect to beef

production plants owned and operated by Tyson Fresh, Tyson Foods explained that “[w]e had to

stop production[], [w]e had to close plants several times in the quarter, not every plant, but several

plants several times in the quarter.”

85. Tyson Foods and Tyson Fresh also guarantee each other’s debts. Tyson

Fresh has issued multiple debt securities guaranteed by Tyson Foods. In a registration statement

filed with the SEC in 2009, Tyson Foods notified investors that Tyson Fresh pledged not only its

own assets to guarantee debt instruments but also those of Tyson Foods and certain “other domestic

operation subsidiaries of Tyson [Foods].”

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86. Similarly, in a 2014 prospectus filed with the SEC, Tyson Foods stated that

Tyson Fresh would act as a guarantor of Tyson Foods’ debt securities, including debentures, notes,

and all other types of debt. Tyson Foods has issued multiple senior notes under this arrangement.

87. Finally, in registrations with the USDA’s Food Safety Inspection Service,

Tyson Fresh slaughter plants in Dakota City, Nebraska, Lexington, Nebraska, and Amarillo,

Texas, identify Tyson Foods as a business name of Tyson Fresh.

88. Tyson Foods’ extensive involvement in Tyson Fresh’s management and

operations demonstrates these entities’ unity of purpose (e.g., to profit from their price fixing) and

common objectives. Tyson Foods’ extensive involvement in Tyson Fresh’s management and

operations also reveals that these entities’ general corporate actions are guided and determined by

one corporate consciousness. Tyson Foods does not merely provide long-term strategy and

guidance to Tyson Fresh. Tyson Fresh’s entire purpose is to execute Tyson Foods’ directives

within the greater Tyson enterprise and to serve as an instrumentality of Tyson Foods. Throughout

the Conspiracy Period, Tyson Foods exerted, and had the right to exert, control over Tyson Fresh.

In this manner, Tyson Foods independently participated in the illegal enterprise with Tyson Fresh

and, as a result, has sufficient knowledge, intent, and involvement in Defendants’ conspiracy to be

found liable under the Sherman Act with Tyson Fresh as a single enterprise.

IV. INDUSTRY BACKGROUND

89. The market for fed cattle in the United States is substantial. In 2017 alone,

for example, 25.8 million fed cattle were slaughtered and processed into beef products, which

accounted for 80% of the 32.2 million commercial cattle slaughtered across the United States. 9

9 The non-fed volume is comprised of slaughter cows (female cattle that have birthed a calf) and bulls,
whose meat is typically used for lesser quality beef products.

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90. The size of cattle herds in the United States is influenced by what is known

as the “cattle cycle,” which is a process in which the size of the national cattle herd increases and

decreases over time. Variation in herd size is often caused by the lengthy gestation period of cattle

relative to hogs and poultry, which constrains cattle producers’ response to profit fluctuations. In

general, the cattle cycle is determined by the combined effects of cattle prices, the gestation period,

the time needed for raising calves to market weight, and climatic conditions. If cattle producers

expect the price of cattle to be high, they slowly build up their herd sizes, but if they expect prices

to be low, they will reduce their herds by culling older cows and keeping fewer heifers.

91. Production of cattle raised for beef takes considerable time and investment.

The cattle production cycle, running from birth to slaughter, typically ranges between 15 to 24

months, and is the longest of all animals typically raised for meat. Fed cattle progress through

three interrelated stages prior to slaughter: cow/calf; stocking and background; and feedlots, as

detailed in Figure 6 below.

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Figure 6.

92. The life cycle of cattle raised for beef is longer than that of any other animal

commonly raised for meat. As Figure 6 illustrates, the beef value chain comprises several stages.

Calves are first raised by their mothers for about six months. When they weigh about 500 pounds,

the calves are weaned and sold to the stocker-yearling sector, where they eat a diet of forage, wheat

pasture, and sileage. When a steer or heifer reaches 600–800 pounds, it is sold to a feedlot, where

it eats corn and protein supplements in addition to roughage.

93. Once cattle reach approximately 1,200–1,400 pounds, they are sold as fed

cattle to the beef producers/packers, including Defendants. Defendants and other beef

producers/packers then slaughter and process the cattle into edible boxed beef and primal and

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smaller case-ready consumer cuts. A steer weighing 1,200 pounds typically yields about 490

pounds of edible beef.

94. Cattle are sold to beef processors, including Defendants, through two

channels. About 70% of cattle are sold through supply contracts (known as captive-cattle

agreements) with feedlots or, to a lesser extent, ranching operations. The rest of the cattle are sold

on the spot market, which is typically the benchmark for prices of cattle sold under the captive-

cattle agreements. Thus, by increasing the volume of the cattle they purchased under captive-cattle

agreements, and decreasing their spot purchases, Defendants, with their considerable market

power, were able to depress the price they paid under both spot and captive-cattle agreements.

95. In the final stage of the farm to market journey, Defendants and other

meatpackers sell the beef to wholesalers, grocery chains, food distributors, food processors,

restaurants, and other large retailers, including Plaintiff, through its assignors.

96. On information and belief, during the Conspiracy Period, Tyson Fresh, JBS

USA/Swift/Packerland, CMS, and National Beef each conduct daily meetings, typically from their

head offices, attended by representatives of their respective cattle procurement, plant operations,

scheduling, beef sales, and risk management teams, among others, to make decisions regarding

their respective cattle and beef operations. The attendees of these meetings will discuss, among

other matters, the number of cattle their fed cattle business will procure, the terms on which they

would be bought, plant scheduling (including slaughter volume) across each of their slaughter

facilities, and beef sales strategy.

97. Because the cost of beef production is predominately made up of the cost

of fed cattle, Defendants’ profitability is driven by the “meat margin,” which is the spread between

the price that packers pay for fed cattle and the price they charge for beef. The meat margin is

sensitive to changes in industry aggregate slaughter levels, and Tyson Fresh, Swift/Packerland,

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CMS, and National Beef can (and have through collusions) increased it. As noted by the U.S.

Department of Justice (“DOJ”), “[a]ll else being equal, when the meat packing industry reduces

production levels, feedlots and cattle producers are paid less for fed cattle because fewer fed cattle

are demanded and customers pay more for [beef] because less is available for purchase. Because

the supply of fed cattle and demand for [beef] are relatively insensitive to short-term changes in

price, even small changes in industry production levels can significantly affect packer profits.” 10

98. As a result of these sensitivities, during the Conspiracy Period, Tyson Fresh,

Swift, Packerland, CMS, and National Beef on behalf of their respective Defendant parent

companies, can (and did) improve their profitability by coordinating what they paid for slaughter-

ready cattle and the resulting supply of fed cattle, at the expense of buyers of beef, including

Plaintiff, through its assignors, who paid more than they would have but for Defendants’ illegal

conduct.

V. DEFENDANTS’ ANTITRUST VIOLATIONS

99. By approximately late 2014 or early 2015, Operating Defendants were

experiencing shrinking profit margins on their beef sales. In earnings calls or annual reports, the

two largest Defendants, Tyson Foods and JBS S.A., reported the slumping profitability of their

beef operations.

100. On a November 7, 2014, earnings call, Tyson Foods reported a quarterly

operating margin for its beef division that was less than half the margin enjoyed by its poultry

division. Similarly, in its 2014 Earnings Release, JBS S.A. announced that its U.S. beef segment

(JBS USA) was underperforming relative to its chicken segment (which had “performed really

well in 2014”) and pork segment (which in 2014 was the “best result in the pork industry in the

10 U.S. v. JBS, Case No. 08-cv-5992 (N.D. Ill.), ECF No. 48 (“Amended Complaint”), ¶¶ 26-27. See also
Section VII.D. below on the elasticity of demand for beef.

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US”). Its beef quarterly margin was less than one-third of its chicken segment and less than one-

half of its pork segment’s margin.

101. Rather than trying to improve profitability through independent conduct

pursuant to unilateral business interests, Defendants instead agreed to collectively reduce and

manage their respective slaughter volumes, which, in turn, resulted in a reduction in the supply of

beef. The artificial beef shortages ushered in a new era of supra-competitive prices paid by

Plaintiff, through its assignors, and other direct purchasers of beef.

A. Direct Evidence of Defendants’ Conspiracy

102. Information recently unsealed in public filings confirms Defendants’

conspiracy, as witnessed by a former Swift employee known as Witness 1. The allegations below

concerning Witness 1 are based on those filings and other recently sealed information.

103. Based on conversations with James Hooker, head of fabrication at Swift’s

Cactus, Texas plant, Witness 1 states that Operating Defendants agreed with each other to

periodically reduce their respective purchase and slaughter volumes, resulting in beef prices above

competitive levels paid by direct purchasers like Plaintiff, through its assignors.

104. During his decade-long employment, including several years during the

Conspiracy Period, Witness 1 was a head quality assurance officer with primary responsibility for

the Swift plant’s kill floor, hotboxes, and coolers. The kill floor is where cattle are slaughtered and

dressed, i.e., where head, hide, and internal organs removed. The carcasses are then moved to the

hotboxes to cool down, before being stored in the coolers ahead of fabrication, where they are

broken down into smaller cuts.

105. According to Witness 1, he learned of Operating Defendants’ collusive

purchase and slaughter reduction agreement from Mr. Hooker, who was employed as the head of

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fabrication at the same Cactus, Texas plaint as Witness 1. As explained below, Mr. Hooker was

positioned to know (and did know) about Defendants’ unlawful agreement.

106. Witness 1 regularly spoke with Mr. Hooker before starting his shift to learn

the slaughter and fabrication numbers for that day and the upcoming days, which information

Witness 1 and his team needed to execute their responsibilities, including the placement of his

team, arrangement of hotbox and cooler space, the number of carcasses they would need to process

through the hotbox and coolers that day, and his interactions with USDA inspectors.

107. In addition to the fabrication plan, Mr. Hooker, like Witness 1, also needed

to understand the number of cattle scheduled to be slaughtered each day. Among other matters, if

the kill volume was lower but the price of beef remained favorable, the fabrication floor would

continue to process carcasses at typical rates. However, when kill volumes were reduced and the

price of beef was unfavorable, Mr. Hooker might order the carcasses to stay longer in the hotboxes

and coolers before being processed into beef cuts so as to improve grading performance. In this

circumstance, Witness 1 and his team would allow more space between each carcass in the

hotboxes.

108. But, if the kill volume was higher, Mr. Hooker increased the number of

carcasses processed. To ensure there was sufficient space in the hotboxes and coolers, and Witness

1 spaced the carcasses closer together when filling the hotboxes. The number of carcasses expected

to be put into the hotboxes also dictated the amount of air and water that Witness 1 and his team

used to ensure proper cooling speeds. In sum, it was essential for both Mr. Hooker and Witness 1

to know the plant’s planned slaughter figures to coordinate and perform their core job duties.

109. Witness 1 reported having had a “decent” working relationship with Mr.

Hooker.

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1. Mr. Hooker Was Well Positioned to Know About Operating

Defendants’ Unlawful Agreement
110. On information and belief, Mr. Hooker continues to work at Swift’s Cactus

plant, where he has worked for over 15 years in that role, including a short stint as head of slaughter

operations. Witness 1 reports that before working for Swift in the early 2000s, Mr. Hooker worked

at Tyson Fresh’s Amarillo, Texas slaughter plant, where he was also responsible for fabrication.

111. As a fabrication manager for Swift, Mr. Hooker reported directly both to

Cactus’s General Manager, Manny Guerrero,11 and directly to the beef production department of

JBS USA/Swift/Packerland’s head office in Greeley, Colorado.

112. As head of fabrication, Mr. Hooker needed to be informed as to cattle

buying/scheduling, cattle slaughter, and beef selling aspects of JBS USA/Swift/Packerland’s fed

cattle business. He thus interacted with personnel across JBS USA/Swift/Packerland. In particular,

in addition to his direct reports, Mr. Hooker would also speak directly to other managers within

the JBS corporate office about plant operations, including scheduled slaughter and fabrication

volumes, and fabrication priorities.

113. For example, during the Conspiracy Period, Mr. Hooker regularly spoke

directly to Mr. Sergio Sampaio Nogueira, Head of Operations and Executive Vice President of

Beef Operations for JBS’s Fed Beef Business during the Conspiracy Period, when Mr. Nogueira

visited the Cactus, Texas plant, which occurred regularly. Witness 1 understands that Mr. Hooker

would also speak to Mr. Sergio Nogueira at other times. Mr. Hooker’s contact with senior

management confirms that JBS USA/Swift/Packerland senior executives maintained direct

connection with plant-level managers, like Mr. Hooker, during the Conspiracy Period. Mr. Sergio

11 Mr. Guerrero worked for CMS for approximately 17 years prior to his move to JBS’s Cactus Plant. He
was Plant Manager for CMS’s Fresno, CA plant prior to his departure in early 2012.

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Nogueira was installed by Wesley Batista, JBS S.A.’s CEO,12 and was regarded as Mr. Batista’s

“right hand man” in regards to JBS’s U.S. beef operations. Mr. Sergio Nogueira had primary

responsibility for Swift’s fed cattle plant scheduling and/or operations during the Conspiracy

Period.

114. Mr. Hooker, along with Ryan Wagnon (Head of Slaughter Operations at

Swift’s Cactus, Texas plant) was also responsible for operations at the plant in the absence of Mr.

Guerrero and the Plant Engineer,. When acting as the Cactus, Texas plant’s General Manager, Mr.

Hooker worked closely with beef executives from across JBS’s head office. As such, Mr. Hooker

regularly spoke to, and had a close working relationship with, high ranking individuals at JBS:13

12 Wesley Batista is one of the sons of JBS S.A. founder Jose Batista Sobrinho. Wesley Batista and his
brother Joesley Batista took control of JBS S.A. in the early 2000s, prior to JBS’ acquisition of Swift and
Pilgrim’s Pride. Wesley was CEO of JBS S.A., and directed JBS’ takeover of Swift. He remained in that
role, and as a director and senior executive of JBS USA, Swift and Packerland, until he was implicated in
a 2017 bribery and corruption scandal in Brazil, for which he was ousted as CEO and spent time in prison.
13 From right to left: James Hooker - Cactus Fabrication Operations Manager; Donna Estrada – Cactus
Technical Services Manager; Al Almanza – JBS Global Food Safety Director; Sergio Sampaio – JBS
Corporate Director of Operations; Paul Kieker – FSIS Undersecretary USDA Operations; Dr. Hafeez –
Texas USDA FLS; Dr. Mindy Brashears – FSIS Undersecretary USDA FS; Brian McFarlane – JBS
Corporate Director of Technical Services; Mark DeRaad – Cactus Value Added Manager; Ryan Wagnon –
JBS Slaughter Operations Manager.

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115. Mr. Hooker, Mr. Sergio Nogueira, and Mr. Wagnon, are respectively

pictured on the far left, fourth from the left, and far right.

116. On information and belief, in addition to having corporate information for

JBS, Mr. Hooker had information regarding the other Operating Defendants. Mr. Hooker regularly

told Witness 1 that he was in contact with his former colleagues at Tyson Fresh’s Amarillo, Texas

plant, including his replacement there. Mr. Hooker also told Witness 1 that he had friends and

former colleagues at other Defendants’ plants with whom he stayed in touch. Mr. Hooker often

provided Witness 1 with detailed information regarding the current and future operations of Tyson

Fresh’s, CMS’s, and National Beef’s nearby packing plants.

2. Witness 1 Learns of Defendants Unlawful Agreement

117. During the Conspiracy Period, Witness 1 reports having multiple

discussions with Mr. Hooker during which Mr. Hooker explained that all of the Operating

Defendants reduced their purchase and slaughter volume in order to reduce fed cattle prices when

Operating Defendants viewed fed cattle prices as being or becoming “too high” for their liking.

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During one such conversation in 2015, Mr. Hooker specifically admitted that the Defendants had

an “agreement” to reduce their purchase and slaughter volumes in response to what they perceived

to be high cattle prices.

118. According to Witness 1’s account, he was in Mr. Hooker’s office when Mr.

Hooker received an angry phone call from his immediate supervisor, who worked out of JBS

USA/Swift/Packerland’s central office in Greeley, Colorado.

119. After the call concluded, Witness 1 reports that he asked Mr. Hooker how

“many are we [Swift’s, Cactus plant] cutting [i.e. fabricating]?” Witness 1 reports that Mr. Hooker

replied the “cut” was going to be steady that day, but that the “kills are getting cut back, [because

the] price is getting too high” (or words to that effect). 14

120. Witness 1 also recalls asking Mr. Hooker whether Swift Cactus’s

competitor plants were also cutting back their kill. Witness 1 reports he recalls that Mr. Hooker

answered Witness 1’s question as follows: “Yes, they are. We have had that agreement that we

don’t kill while prices are up for a while” (or words to that effect).

121. Witness 1 is certain that Mr. Hooker intended to convey that all Operating

Defendants were reducing their slaughter volumes by agreement in response to high prices, and

was not simply commenting on the fact that one or some of the Operating Defendants had

independently decided to reduce slaughter.

122. Witness 1 stated that Swift’s Cactus, Texas plant had a 5,500–6,000 head

per day slaughtering capacity and might drop its kill level back to around 4,800–5,200 head per

day when implementing Defendants’ unlawful agreement. In furtherance of the agreement, bought

14 Witness 1 reports that there was typically a lag between the commencement of a slaughter reduction
and the reduction of fabrication activities, one reason being that Slaughter Plant 1’s fabrication team had to
continue to process the carcasses that were already hanging in the coolers.

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and slaughtered fewer cattle, which entailed running its slaughter plants at reduced hours,

operating those plants at lower “chain speeds,” and/or scheduling maintenance shutdowns. Witness

1 recalls management at Swift’s Cactus, Texas plant, including Mr. Guerrero and Mr. Wagnon,

telling staff during these periods of reduced slaughter during the Conspiracy Period that kill levels

were being reduced in response to fed cattle prices.

123. As further described below, Defendants coordinated and agreed to refrain

from expanding their slaughtering and processing capacity, thereby further restricting the supply

of beef.

B. The Available Data Corroborates Witness 1’s Account

124. Public reports, Defendants’ slaughter data, and the cattle sales data in

Plaintiff’s possession, indicate that all Operating Defendants reduced and rationed their slaughter

volumes during the Conspiracy Period, resulting in supra-competitive beef prices. Operating

Defendants also managed their respective slaughter volumes throughout the Conspiracy Period in

relative lockstep in order to ensure the supply of beef remained lower than the increasing demand.

Operating Defendants did so despite cattle being readily available and as Operating Defendants’

margins ballooned.

125. The slaughter reductions, while most obvious at the beginning of each year,

occurred at various points throughout the Conspiracy Period. In particular, Operating Defendants

collectively moderated their slaughter volume across the second and third quarters of most years

in a successful attempt to expand their margins across a number of months, thereby also

forestalling both the onset, and minimizing the effect of, the increase in slaughter volume that

historically occurs in the fall.

126. Operating Defendants’ joint slaughter management was not a reaction to

changes in beef demand, which, as admitted by Tyson Fresh’s head of procurement in 2018, had

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been “off the charts.” 15 See also Figure 11 below, demonstrating rising beef demand throughout

Conspiracy Period. Nor did any Operating Defendant break from the agreement and buy more

cattle in an attempt to capture greater market share, despite all posting profit margins clearly

demonstrating that no Operating Defendant was running at or near their marginal cost of

production. From the end of the first quarter of 2015 through the end of the Conspiracy Period,

Operating Defendants posted record per-head net margins. Moreover, market events and

conditions do not explain Defendants’ unusually high profit margins – even excluding 2019 and

2020, which saw Operating Defendants’ margins increase in the aftermath of the Tyson Holcomb,

Kansas plant fire and COVID disruption (discussed below), Operating Defendants average per-

head margins across the Conspiracy Period for the first, second, third and fourth quarters vastly

exceeded their pre-Conspiracy Period averages ($37 v. $0, $127 v. $21, $134 v. $25, $116 v. -$16,

respectively).16

127. Operating Defendants’ rationing of the fed cattle supply among themselves

in parallel throughout the Conspiracy Period is demonstrated through Figure 1 below, which

records each Operating Defendant’s estimated quarterly slaughter volume:

15 Tyson Fresh Meats: What the Consumer Demands – John Gerber, VP, Cattle Procurement, Tyson
Foods; Kevin Hueser, VP, Beef Pricing, Tyson Foods, from the 2018 NIAA Antibiotic Symposium: New
Science & Technology Tools for Antibiotic Stewardship, November 13–15, 2018, Overland Park, KS,
USA, https://www.youtube.com/watch?v=qCip3WBcqzo.
16 Per-head net margin estimates cited in the Complaint sourced from the Sterling Profit Tracker produced
by Sterling Marketing Inc. and published weekly on www.drovers.com unless stated otherwise. Pre-
conspiracy period average per-head margins calculated across 1997 to 2014.

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Figure 1. Operating Defendant’s Quarterly Fed Cattle Slaughter Volume 17

128. Figure 1 demonstrates that Tyson Fresh, Swift/Packerland, and National

Beef each dramatically reduced their slaughter across 2015, while Cargill held its slaughter

volumes steady following its 2014 cuts. These artificial reductions worked to cause the dramatic

decline in fed cattle prices starting in 2015 and continuing throughout the Conspiracy Period, while

beef prices were stabilized or increased.

129. And while the quarterly reporting period obscures certain shorter reductions

described below in Sections V. C-F, it does detail the remarkable extent to which Operating

17 Tyson, JBS and National’s beef slaughter volume figures reproduced in Figure 1 were derived from
Packing Defendants’ (in the case of National Beef, its shareholders’) financial disclosures and Cattle Buyers
Weekly’s record of each Defendant’s fed cattle and non-fed cattle slaughter ratio to isolate the portion of
their reported quarterly revenue figures attributed to beef and by-products produced from fed cattle
slaughtered within the United States. Then, the volume of fed cattle (and beef) necessary to generate the
disclosed revenue was determined, taking into account prevailing beef and by-product prices (as reported
by USDA AMS boxed beef cutout reports and USDA drop-credit values), carcass weights, carcass grading
performance (by region), and hot carcass/dressing percentages. Cargill’s quarterly slaughter figures were
derived by reference to Cargill’s market share over time.

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Defendants’ quarter-to-quarter slaughter changes move in lockstep with each other. This

parallelism is consistent with and the product of an agreement to jointly manage and reduce their

slaughter levels below a competitive level.

130. Figure 1 highlights the parallel reductions made by Operating Defendants

in the winter/spring to constrain the seasonal rise in fed cattle prices historically experienced at

this time, which had the effect of raising beef prices to a supra-competitive level. Tyson Fresh,

Swift/Packerland, CMS, and National Beef each cut production at a similar time and by a similar

amount:

• Q1 2015 (except Cargill whose production was flat after making significant
cuts in 2014)

• Q1 2016

• Q1 2017

• Q1 2018

• Q4 2019 and Q1 2020

131. This uniform reduction during periods of seasonally lower cattle availability

is not evident in the pre-Conspiracy Period. For example, in the fourth quarter of 2012, both CMS

and Swift/Packerland significantly increased their slaughter volumes (3.7% and 12.0%,

respectively on a quarter-by-quarter basis), while Tyson’s held its steady (0.1% increase), and

National Beef engaged in notable cuts (-4.0% decline). Similarly, in Q3 2013, Tyson Fresh and

National Beef increased their slaughter volumes, while Swift/Packerland and CMS reduced theirs.

Across Q2 to Q4 2014, Swift/Packerland evidently sought to capture market share, first

substantively increasing its slaughter volume in the second quarter (a 16.3% increase against other

Defendants increases of between 4.8%-10.2%) before holding it steady across the third and fourth

quarters while each other Defendant’s volumes declined in those two quarters.

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Case 1:24-cv-07017-TAM Document 1 Filed 10/04/24 Page 43 of 100 PageID #: 43

132. What is not apparent from Figure 1 is the deep nature of the cuts in 2015

and 2016 when comparing the same quarter to historic production (2012–2014). In 2015, the

production decreased in the year overall and each quarter. For 2016, the production decreased

overall and for 3 of 4 quarters. Tyson Fresh, Swift/Packerland, CMS, and National Beef’s

production was down comparing year-on-year changes against an average of 2012–2014, as seen

in Figure 7:

133. Operating Defendants’ strategy was immediately successful, with lower

slaughter volumes and lower beef output resulting in artificially high beef prices, despite cash

cattle prices falling. Operating Defendants’ meat margin expanded rapidly as a result.

134. Moreover, each Operating Defendants’ conduct stands apart from that of

Independent Packers’, who increased their annual slaughter volume in 2015 by 7.8% year-on-year.

135. And, though Operating Defendants gradually increased their slaughter

volumes over the rest of the Conspiracy Period, their rates of increase lagged far behind those of

other producers, as evidenced by the following Figure 2:

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136. Figure 3 compares the annual slaughter volumes of Operating Defendants

and smaller producers before and during the Conspiracy Period and breaks out these volumes for

each year of the Conspiracy Period for which data is available. In every year, Operating Defendants

slaughtered fewer cattle than they did before the Conspiracy Period. Also shown is that, though

Operating Defendants gradually increased their slaughter volumes year over year during the

Conspiracy Period, their rates of increase lagged far behind other producers’ rates, and far behind

the rate of change that would have occurred in a competitive market.18

18 See Cattle Buyers Weekly, “Top 30 Beef Packers” Annual Reports, 2008-2019, 2018 Meat & Poultry
Facts, 47th Ed., NORTH AMERICAN MEAT INSTITUTE, 2019, at 11 (National Beef acquired Iowa
Premium in June 2019, adding 300,000 head to its annual fed cattle slaughter volume. Absent that
acquisition, its 2019 slaughter volume was flat versus 2018. At the same time, independent packers’
collective slaughter volume rose by approximately 100,000 head (net of the Iowa Premium acquisition)).

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Case 1:24-cv-07017-TAM Document 1 Filed 10/04/24 Page 45 of 100 PageID #: 45

Figure 3.
Average Pre - & Post-Conspiracy Period Fed Cattle Slaughter-Operating Defendants vs.
Others

137. As shown in Figures 2 and 3 above, each Operating Defendant slaughtered

significantly fewer cattle in 2015 than their pre-conspiracy period average, and then maintained

artificially low slaughter levels throughout the remainder of the Conspiracy Period. That Operating

Defendants each slowly raised their slaughter levels as the availability of fed cattle increased

during the Conspiracy Period only reinforces the likelihood of a collective agreement to manage

slaughter levels after their initial cut: Five full years later, none of the Operating Defendants have

returned to their pre-2015 levels despite record profitability, while Independent Packers slaughter

is up nearly 50% against their pre-Conspiracy Period average, and 25% against their 2015 levels.

The result of such action gave Operating Defendants the ability to manage collective demand such

that it never outpaced supply, and ensured the supply of beef stayed below demand.

C. Operating Defendants Slash Production in 2015

138. The impact of the conspiracy was felt in 2015, evidenced by publicly

available data. Each Operating Defendant cut its annual cattle slaughter volumes during the

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Conspiracy Period by an average of about 11.3 percent compared to the pre-conspiracy period

(2007-2014). In sharp contrast, other meatpackers increased their cumulative annual slaughter

volumes during the same period by an average of 41.2 percent.

139. Data breaking out slaughter volumes for each year of the Conspiracy Period

highlight Operating Defendants’ reductions in 2015, though other beef producers maintained or

increased their volumes that same year. Despite a slight uptick in the final quarter of 2015, Tyson

Fresh’s overall 2015 slaughter volume was down by 4% as compared with 2014 levels,

Swift/Packerland by 17 percent, and National Beef by 6 percent. CMS’s 2015 production was flat

compared with the prior year, but 11.3% below historical levels. All this occurred during a

sustained recovery in the broader economy, as the U.S. population grew steadily, and beef demand

was high.

140. In the first quarter of 2015, Tyson Fresh, Swift/Packerland, and National

Beef’s year-on-year slaughter was down by approximately -1.8%, -11.2%, and -8.6%, respectively

from first quarter 2014. CMS’s quarterly slaughter volume was down against a 2012–2014 average

and its first quarter 2015 slaughter volume, like that of its co-conspirators, was still down compared

to its fourth quarter 2014 volume.

141. These declines were reflected in the Defendants’ public reporting. Tyson’s

May 4, 2015 10-Q noted that its “sales volume decreased [in the quarter ending March 28, 2015,

year-on-year] due to a reduction in live cattle processed.” 19 Jefferies Financial Group, Inc.

(“Jefferies”), National Beef’s then-majority shareholder, noted in its 10-Q filed May 8, 2015 that

National Beef’s revenues were down year-on-year for the first quarter “primarily to lower sales

19 Tyson Foods Inc. 10-Q, May 4, 2015 at 37, https://d1lge852tjjqow.cloudfront.net/CIK-

0000100493/593a568a-359d-470d-b48e-3a1fe35419f7.pdf.

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volume, as fewer cattle were processed.” 20 JBS S.A.’s earnings presentation for the first quarter of

2015 noted a 1.1% year-on-year decline in the “number of animals processed” by its JBS USA

beef unit.21

142. Expanding on their respective cuts, Tyson Fresh, Swift/Packerland, CMS,

and National Beef extended their joint slaughter reduction during the second and into the third

quarters of 2015. Across the second quarter, Tyson Fresh, Swift/Packerland, and National Beef’s

year-on-year slaughter volume was down by approximately -5.4%, -12.8%, and -6.2%,

respectively. CMS continued to hold to its low 2014 volume, posting an essentially flat year-on-

year growth of 1.8% in the second quarter, and -12.7% against its 2012-2014 average second

quarter production.

143. Again, this reduction in cattle purchases was also reflected in Tyson

Foods,22 JBS S.A.,23 and Jefferies (National Beef’s)24 financial reporting.

20 Jefferies 10-Q, May 8, 2015 at 57, http://ir.jefferies.com/reports-filings/sec- filings/sec-filings-

details/default.aspx?FilingId=10683755.
21 JBS S.A., 1Q 2015 Results, May 13, 2015 at 15, https://mz- filemanager.s3.amazonaws.com/043a77e1-
0127-4502-bc5b-21427b991b22/central-de- resultadoscentral-de-downloads/
8bc0bd99f655d7c38a18d265a7ed397678c5e9774341f1efd1c98745f1a8a360/ 1q15_earnings_ release.pdf.
JBS USA Beef segment also encompasses JBS S.A.’s much smaller Australian and Canadian beef
businesses and Australian sheep operations. Presentation also noted a -1.1% decline in cattle processing
(both fed and non-fed) across its U.S., Australian and Canadian beef businesses. JBS USA’s fed cattle to
non-fed cattle slaughter ratio throughout the conspiracy period was 80% fed, 20% non-fed.
22 Tyson’s 10-Q for its quarter ending June 27, 2015 recorded year-on-year declines in sales in its beef
segment revenue due to a “reduction in live cattle processed”. See Tyson Foods 10-Q filed August 2, 2015,
p. 38. See also10-K filed November 23, 2015, p. 29 (noting reduction in sales revenue in FY 2015 as against
FY 2014 due to lower cattle processing).
23 JBS S.A., 2Q 2015 Results, August 13, 2015 at 15, https://mz-
filemanager.s3.amazonaws.com/043a77e1-0127-4502-bc5b-21427b991b22/central-de- resultadoscentral-
de- downloads/02fd1b6f7f1cee632e5af617767bc7a98017ead954465d63d1e8633b2ec5a3cd/2
q15_earnings_release.pdf (noting -0.9% decline in cattle processing (both fed and non- fed) across its US,
Australian and Canadian beef businesses).
24 Jefferies 10-Q, August 5, 2015 at 52, http://d18rn0p25nwr6d.cloudfront.net/CIK-
0000096223/6f776d2a-f247-4868-a18b-32f9e3b4eefe.html (noting revenues for three and six month 2015
periods decreased year-on-year “primarily due to lower sales volume, as fewer cattle were processed”.);

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144. Operating Defendants’ determination to break cash cattle prices through

their collective slaughter reductions and reduced cash cattle purchases was remarked upon by

industry analysts at the time. On June 12, 2015, analyst Cassandra Fish of “The Beef” and formerly

a risk manager at Tyson, speculated as to when one of the Operating Defendants might break ranks:

Rarely has this industry segment [the beef packers,] been an all-for-
one and one-for-all group. All packers need to buy cattle inventory.
Most have cut hours. So will someone break ranks, pay up for cattle
and add hours to capture the better realization that the next boxed
beef rally will bring? Will one short a customer only to find that
order filled by a competitor? 25
145. Ms. Fish answered her own question a few weeks later, remarking on June

25, 2015 that the “packers refuse to reach for cattle and are currently in command. After 3 weeks

of sharply curtailed kills, packers are exhibiting incredible discipline and letting the kill increase

gradually,” limiting the ability “of feeders to get all cattle marketed [i.e. sold] in a timely

fashion.”26

146. During the remainder of 2015, Operating Defendants continued to restrain

their slaughter levels and curtail their purchases of cash cattle even after it became clear that there

was an abundant supply of slaughter-ready cattle available to purchase at historically low prices,

and processed beef prices remained high. 27 They did so even though it meant under-utilizing their

plants, which is inconsistent with individual profitability but has the benefit of higher overall

industry profitability.

Jefferies 10-Q, November 5, 2015 at 53 (noting the same in relation to 3Q 2015 and first three quarters of
2015).
25 Cassandra Fish, Futures Holding Gains; Waiting on Cash, THE BEEF (Jun. 11, 2015),
https://www.thebeefread.com/2015/06/11/futures-holding-gains-waiting-on-cash/.
26 Cassandra Fish, Another Round of the Blues, THE BEEF (Jun. 25, 2015),
https://www.thebeefread.com/2015/06/25/another-round-of-the-blues/.
27 Cassandra Fish, Kills Too Small For Too Long, THE BEEF (Sep. 8, 2015),
https://www.thebeefread.com/2015/09/08/kills-too-small-for-too-long/.

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147. On August 3, 2015, Tyson’s CEO, Donnie Smith, admitted that plants were

not running at full capacity, when discussing Tyson’s decreased purchases over the preceding

quarter, noting “[b]ecause we run for margin and not for market share, we’re not willing to overpay

for cattle and we’ve had to cut back on our hours at our plants resulting in inefficiencies and added

costs. In the short-term, we are negatively impacted, but markets will equilibrate and conditions

are expected to improve for the long term.” 28 In response to a question regarding the consequent

impact of Tyson’s underutilization of its plant capacity, Mr. Smith elaborated:

In terms of quantifying the impact, we know when we’re running

34s and 36s a week in our plants that that does cost us. It raises the
cost in our plant, makes us a lot less efficient, so it does have a cost
to us. I don’t know that I can quantify that right off the bat, but it
does impact margin.29
148. Tyson Fresh, Swift/Packerland, CMS, and National Beef’s concerted

actions to depress cattle prices across 2015 (and their successes) are summarized by the below

chart. Figure 8 compares the price of fed cattle across 2015 against the number of fed cattle

slaughtered across 2014 and 2015 at packing plants subject to AMS LMR reporting obligations. 30

These figures are a very good proxy for Tyson Fresh, Swift/Packerland, CMS, and National Beef’s

cumulative slaughter volume as they operate the substantial majority of such plants and appear to

provide over 90% of the reported transactions. As demonstrated in Figure 8 below, the 2015

slaughter volumes are lower than 2014 in every month except February and November and lower

than 2010–2014 averages in every month except October.

28 Tyson Foods, Q3 2015 Earnings Call, Seeking Alpha Transcript (Aug. 15, 2015).
29 Id.
30 Figure 8 was prepared using USDA Market News Service Reports: LM_CT106–National direct
slaughter, committed and delivered, LM_CT151-National Weekly–Formula, Forward, Negotiated Net
(Domestic), and LM_CT154–Weekly National direct slaughter, negotiated. Fed cattle prices shown in
Figure 8 is the weighted average price of all four purchase categories (formula, forward, negotiated (i.e.
cash), negotiated grid).

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Figure 8.
Total Fed Cattle Slaughter Volumes and Fed Cattle Prices – All Purchase Types

D. Operating Defendants Continued to Artificially Limit Supply in 2016.

149. By “ration[ing] their new purchases [of cattle]” and running shorter 32-hour

weeks in early January, Operating Defendants dampened rising cattle prices and extended the rally

in beef prices.31 Operating Defendants then further inflated beef prices by sustaining low kills

across February and March. 32

150. Tyson Fresh, Swift/Packerland, CMS, and National Beef reduced their

slaughter volumes in the first quarter of 2016: Tyson Fresh (-1.1%), CMS (-3.7%),

Swift/Packerland (-16.6%), National Beef (-4.7%). Moreover, all Operating Defendants

slaughtered fewer cattle than their average first quarter volume compared to 2012-2014: Tyson

Fresh (-4.5%), Swift/Packerland (-21.7%), CMS (-9.3%), and National Beef (-14.9%).

31 Cassandra Fish, Global Sell Off Smacks Cattle, THE BEEF (Jan. 4, 2016),
https://www.thebeefread.com/2016/01/04/global-sell-off-smacks-cattle/.
32Cassandra Fish, Yet More Consolidation, THE BEEF (Jan. 6, 2016), https://
www.thebeefread.com/2016/01/06/yet-more-consolidation/.

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151. Beef prices continued to increase into March 2016, despite significant ly

lower than expected cattle prices. By rationing the available cattle amongst themselves, Operating

Defendants posted average weekly margins of approximately $63 per head, which was, at that

time, one of their “best Q1 in history” and well above their pre-Conspiracy Period first quarter

average of $0 per head. 33

152. In the second and third quarters, each Operating Defendant’s kill volume

remained below their 2012 to 2014 averages.

153. Despite an increase in the availability of fed cattle, except for Cargill, each

Operating Defendant’s annual slaughter volume in 2016 remained below their 2014 levels (Tyson

Fresh (-6%) and Swift/Packerland (-6%)) or flat (National Beef). 34 Cargill’s 2016 slaughter

remained significantly below the 2012-2014 average at -3.7%.

154. The Operating Defendants’ refusal to break from their collusive agreement

among Defendants and co-conspirators is noteworthy given the margins Operating Defendants

realized across 2016. In the third and fourth quarters alone, Operating Defendants were realizing

average per-head margins on their fed cattle purchases of $123 and $153 per head, respectively.

Not only were these margins significantly above pre-Conspiracy Period averages ($25 and -$16

per head), but they also exceeded the Operating Defendants’ most profitable third and fourth

quarters in modern times by about $30 and $100 per head, respectively. Thus, it was against

Defendants’ unilateral self-interest not to buy and slaughter more cattle because each Defendant

could have increased its profits by doing so.

33 Cassandra Fish, This Week’s Cash Trade, THE BEEF (Mar. 22, 2016),
https://www.thebeefread.com/2016/03/22/sell-off-accelerates/.
34 2018 Meat & Poultry Facts, 47th Ed., NORTH AMERICAN MEAT INSTITUTE, 2019, at 11.

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E. After Historic Cuts, Operating Defendants Continued Restraining the Supply

of Beef, Resulting in Higher Beef Prices in 2017 and 2018
155. Going into 2017, Operating Defendants worked to ensure that any increase

in their collective slaughter volumes did not outpace the growth in slaughter weight cattle

availability and beef demand. Tyson, Swift/Packerland, CMS, and National Beef each reduced

their volumes in lockstep during the first quarter, before raising them together across the second

quarter. See Figure 1. While cattle prices increased from $119/cwt (hundredweight) at the

beginning of February 2017 to a high of $144/cwt in the first week of May 2017 (like spring highs

before 2015), Defendants responded by reducing their slaughter volumes.

156. And while cattle prices did rise from $119/cwt at the beginning of February

to a high of $144/cwt in first week of May (similar to pre-Conspiracy Period spring highs),

Operating Defendants responded by reducing their kills.

157. As with 2016, Operating Defendants enjoyed substantial profits across

2017, posting then-record per-head margins in the second and third quarters ($128 and $147 per

head, respectively). Indeed, Operating Defendants’ average per-head margins for the first and

fourth quarter, $42 and $88 per head, respectively, stood second only to the quarterly profits they

generated in 2016. And again, each Operating Defendant refused to add cattle to expand their

market share despite the obvious profit potential. Instead, they kept their production in lockstep

with one another, rationing supply amongst themselves to ensure the continued suppression of

cattle prices and resulting increase in beef prices.

158. Operating Defendants’ scheme continued into 2018. Each Operating

Defendant then began to tell the market that it had, as a result of the plant closures discussed,

insufficient capacity to slaughter the supposed “wall of cattle” due to reach slaughter-weight in the

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spring and summer of 2018. 35 Operating Defendants then backed off their respective kill schedules

during the first quarter of 2018. 36 See Figure 1, detailing significant decline in first quarter 2018

slaughter as against fourth quarter 2017. 37 As Ms. Fish reported, “Looking back at March’s fed

slaughter rate, it underperformed expectations. . . . Packers appear to have responded to the tight

supply of market-ready cattle in the north by keeping the kill constrained and margins profitable

and stable.” The reduction in slaughter occurred despite record strong beef demand and Operating

Defendants’ underutilized capacity.

159. Defendants’ slaughter reductions occurred despite record strong beef prices

and Defendants’ under-utilized capacity.

160. As a result of their commitment to limiting their purchases of cattle in 2017

and 2018, Tyson Fresh, Swift/Packerland, CMS, and National Beef’s annual slaughter volumes

remained 5.4-7.2%, 10.2%, 9.1% and 12.0-12.8% below their pre-2015 averages, respectively. See

Figure 7. By sharp contrast, Independent Packers’ slaughter volume in 2017 and 2018 increased

46.5% and 56.1%, respectively, as compared to their collective pre-2015 averages.

35 Cassandra Fish, Still Green!?!, THE BEEF (Mar. 27, 2018),

https://www.thebeefread.com/2018/03/27/still-green/ (“The [packers’] mechanical [slaughter] capacity
exceeds needs [across Q2 2018]. The limitation perception is linked to labor. The perception of there being
a limitation has created fear and inspired some cattle feeders to “get in line” by selling [cattle] out-front
[i.e., on captive supply agreements].”).
36 Cassandra Fish, Futures Trade Both Sides; Cash Poised To Trade Lower, THE BEEF (Apr. 2, 2018),
https://www.thebeefread.com/2018/04/02/futures-trade-both-sides-cash-poised-to-trade-lower/.
37 Id.

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F. In 2019 and 2020, Operating Defendants Continued to Limit Slaughter, in

Parallel, Against Their Independent Self-Interest
161. Entering 2019, beef demand remained “terrific”, encouraging packers to run

plants to meet customers’ demand. 38 In a competitive environment, absent a conspiracy, Operating

Defendants would compete to secure as much cattle as possible to expand profitable production.

162. Instead, Operating Defendants continued to collude to limit slaughter

volumes despite market conditions that encouraged market participants to increase, not decrease,

slaughter volumes. In the first quarter of 2019, each Operating Defendant reduced their slaughter

volumes, posting similar quarter-on-quarter declines: Tyson Fresh (-3.5%), National Beef (-4.0%),

CMS (-3.8%), and Swift/Packerland (-4.1%). Operating Defendants each maintained comparably

lighter slaughter volumes across the first three months of 2019, ensuring that their collective

demand did not exceed the available supply. These supply restraints included taking downtime or

reducing the number of hours the plant operated. Operating Defendants continued to constrain

their weekly kill volume and declined to increase production of beef to meet rising demand,

thereby artificially inflating the price of beef. 39

163. The resulting impact of Operating Defendants’ slaughter restraint at the

beginning of 2019 and their continued adherence to a common pricing strategy was that beef prices

increased, despite the fact that prices for cattle continued to fall across the summer, working their

way to an apparent bottom of about $109-110/cwt in the end of June. This left producers facing an

38 Cassandra Fish, How About That, THE BEEF (Feb. 11, 2019),
https://www.thebeefread.com/2019/02/11/how-about-that-3/ (“Rather obviously, beef demand is terrific.
Even in February, notoriously a slow beef demand month. Packer margins are record wide for February.”).
39 See, e.g., Cassandra Fish, And the Beat Goes On, THE BEEF (Feb. 14, 2019),
https://www.thebeefread.com/2019/02/14/and-the-beat-goes-on-2/.

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average $106 per-head loss, against Operating Defendants startling estimated per-head profit of

$257.40

164. Despite robust beef demand, Defendants’ restrained production left

wholesale beef prices higher on a year-on-year basis, despite the fact fed cattle prices were flat.

Ms. Fish reported beef prices were “sizzling” despite most cattle producers losing money. 41

165. A slight $2-3/cwt rise in prices allowed producers to realize a paltry per-

head profit of about $24 by the week ending August 9, 2020, against the Operating Defendants’

profit of $192 per head.

166. Notwithstanding the predicted cash cattle strength across August, a fire at

Tyson’s Holcomb, Kansas slaughter and processing plant on August 9, 2019 provided an

opportunity for Operating Defendants to work cattle prices lower still, sending cattle producers

back into the red. Tyson closed the Holcomb plant indefinitely in the aftermath of the fire. 42

Tyson’s Holcomb plant processed about 6,000 head of cattle per day and was one of seven U.S.

plants capable of processing that capacity. Only Tyson’s Dakota City, Nebraska, plant is larger,

processing up to 7,000 head of cattle per day. The fire created a shortfall in the national packing

capacity of approximately 30,000 heads per week, or approximately 6% of the total U.S. fed cattle

packing capacity.

40 Sterling Beef Profit Tracker: week ending June 21, 2019, STERLING MARKETING INC. (June 26,
2019), https://www.drovers.com/news/industry/profit-tracker-feeding- losses-reach-triple-digits.
41 Cassandra Fish, Packers Press and Cash Softens, THE BEEF (August 9, 2019),
https://www.thebeefread.com/2019/08/09/packers-press-and-cash-softens/.
42 Over 3,800 workers at Tyson Foods beef plant in Kansas out of work after fire, REUTERS (Aug. 11,
2019, 1:30 PM), https://www.reuters.com/article/us-tyson-foods- fire/over-3800-workers-at-tyson-foods-
beef-plant-in-kansas-out-of-work-after-fire-
idUSKCN1V10J1?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_con
tent%7Cbutton%3Abody_link.

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167. However, following the plant fire, Tyson Fresh, Swift/Packerland, CMS,

and National Beef reduced their fed cattle bids and hiked their beef prices. These actions caused a

~$5/cwt drop in fed cattle prices and a ~$14/cwt rise in wholesale beef prices the following trading

week.43 This saw Operating Defendants’ per-head margins nearly doubled from $191 to $358 in

the week ending August 16. The following week, Operating Defendants’ margins continued to

expand, with the spread between fed cattle prices and beef values extending to a then-record high

of $67.17/cwt., $39.51/cwt above the average spread for the same week across 2016-2018.

168. In the month following the Holcomb fire, each Operating Defendant

decreased its production. The parallel and coordinated decrease in production in the face of a large

supply restraint cannot be explained by legitimate reasons, but instead demonstrates the

commitment by the Operating Defendants to maintain high margins and keep cattle slaughter

restricted. Operating Defendants’ purchase and kill reductions in the aftermath of the Holcomb

fire ensured that their collective supply remained constrained, giving the Operating Defendants the

power to increase beef prices while paying less for the cattle.

169. Tyson Fresh, Swift/Packerland, CMS, and National Beef consequently

reaped record high margins in the weeks that followed the Holcomb fire by stepping down fed

cattle prices and raising beef prices in parallel. As cattle prices bottomed out in the week ending

September 13, 2019, the spread between Operating Defendants and Cattle Ranchers per-head

43 Sterling Beef Profit Tracker: week ending August 16, 2019, STERLING MARKETING INC. (August
20, 2019), https://cdn.farmjournal.com/s3fs-public/inline- files/Beef%20Tracker%2081919.pdf. Live cattle
futures contracts were also negatively impacted, with the market responding with two limit-down trading
days on September 12 and 13, 2019.

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margin exceeded $600, with packers making over $400 per-head while producers sustained $200

per head losses. 44

G. Defendants Idled and Closed Plants, and Refrained From Expanding

Processing Capacity
170. Another anticompetitive technique by which Defendants and co-

conspirators implemented their conspiracy involved a longer-term strategy to restrict beef supplies.

171. Operating Defendants permanently closed processing facilities without

replacing most of the lost capacity. These actions came on the heels of reduced production capacity

already caused by a series of plant closures shortly before the Conspiracy Period, including:

a. On January 17, 2013, Cargill Inc. announced it would shut down its
Plainview, Texas, beef-processing facility, one of Cargill’s larger
plants, in the following two weeks. This closure cut Cargill’s
slaughter capacity by 4,650 cattle per day, which was “nearly 4% of
the U.S. beef industry current capacity.” 45

b. In April 2013, JBS USA followed suit by acquiring an inactive plant

in Nampa, Idaho in order to keep it idle. JBS stated that it had “no
immediate plans to reopen the facility,” which would have been
capable of processing about 1,100 cattle per day and, upon
information and belief, remains idle today. 46

c. In June 2014, National Beef closed its Brawley, California plant.

This eliminated another 2,000 cattle per day of slaughter capacity. 47

d. The next month, Cargill Inc. announced it would also close its
Milwaukee, Wisconsin plant on August 1, 2014. This closure

44 Sterling Beef Profit Tracker: week ending September 13, 2019, STERLING MARKETING INC.
(September 18, 2019), https://cdn.farmjournal.com/s3fs-public/inline-
files/Beef%20Tracker%2081919.pdf.
45 Apr. 3, 2013, Votorantim Equity Research Report on JBS.
46 JBS USA Acquires U.S. Operations of XL Foods, JBS April 4, 2013 Press Release,
https://jbssa.com/about/news/2013/04-04/#.X-eami2ZPow .
47 National Beef even rejected a significant package of incentives offered by local government utilities
and nearby feedlots when it decided to close its Brawley plant. “National Beef plant closing Brawley
Facility,” PROGRESSIVE CATTLEMEN (Mar. 24, 2014),
https://www.progressivecattle.com/news/industry-news/national-beef- plantclosing-brawley-facility.

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decreased the industry’s slaughter capacity by another 1,300 to

1,400 cattle per day.

e. Also in 2014, Tyson Foods shut down its Cherokee, Iowa processing
plant. Tyson Foods officials “told the city they would consider
handing over the shuttered plant—but not to any firm that they
believe is competition.” 48 In 2018, Tyson Foods allowed another
company to purchase the plant, but only after inserting a
requirement into the deed that “limited the amount of cattle that can
be processed at the plant for the next 10 years.” 49
172. Operating Defendants continued to shrink the beef industry’s processing

capacity when the Conspiracy Period began, doing so by idling or dispensing with plants. For

example:
a. On, September 11, 2015, Cargill announced that it would sell the
Plainview, Texas plant that it idled in February 2013 because it did
not “make sense to reopen [the plant], especially with excess
processing capacity remaining in the region.”50

b. In August 2015, Tyson Food decreased the industry’s slaughter

capacity by another 2,000 cattle per day by shuttering its Denison,
Iowa plant.
173. Operating Defendants slashed the industry’s annual slaughter capacity by

roughly two million cattle per year—excluding JBS USA’s continued idling of the Nampa, Idaho

plant.

174. While overall industry slaughter capacity increased slightly between 2015

and 2018, this nominal gain was primarily attributable to other, non-conspiratorial, beef-

processing companies. For example, One World Beef Packing restored about 2,000 cattle per day

by reopening the Brawley, California plant closed by National Beef in 2016.

48 Available at https://www.desmoinesregister.com/story/money/business/2016/07/08/held-hostage-
tyson-iowa-towns-dilemma/86449400/.
49 Available at https://www.desmoinesregister.com/story/money/business/2018/09/19/tyson-foods-
cherokee-iowa-plant-iowa-food-group-moves-justin-robinson- pork-beef-chicken-processing/1356962002/
50 Available at https://www.meatpoultry.com/articles/13418-cargill-to-sell-texas-plant.

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175. In sharp contrast to the Operating Defendants’ behavior, non-conspiratoria l

beef processing companies acted consistent with their competitive interests by increasing their

capacity and output in response to reduced costs of cattle and increased prices for beef. However,

their increased efforts to supply the downstream market with beef had little effect on the prices

due to their small market share. Operating Defendants’ market dominance and stranglehold on the

industry meant that these minor incursions by the few remaining independent processors increased

availability only in isolated pockets and had negligible effect on restoring supply (and thereby

reducing beef prices) in most locations. 51

H. Parallel Reductions in Cash Cattle Purchases and Anticompetitive Queuing

Conventions
176. Operating Defendants procure their fed cattle in three ways: (1) on the cash

cattle trade market (the industry’s version of the spot market); (2) through formula or forward

contracts; and—for Swift/Packerland and CMS— (3) relying on their own cattle. Through the

forward contracts, the producer agrees to deliver its cattle once they have reached slaughter weight

at a price to be determined at the time of delivery.

177. To increase their meat margin, Operating Defendants jointly managed their

purchases of domestic fed cash cattle in parallel to purchase amounts below the available supply,

including by reducing the number and volume of purchases. Operating Defendants took advantage

of the supply glut of fed cattle and lower cash cattle prices to increase their meat margin. Operating

Defendants expanded their meat margin by refusing to pass on the savings from the reduced cattle

prices to their beef purchasers, like Plaintiff, thorough its assignors, which would normally happen

51 JBS was the only Defendant that made any capital investment to increase industry slaughter capacity
during the Relevant Period. JBS expanded its Hyrum, Utah plant in 2015 and 2016. However, according
to JBS’s press releases and several industry publications, the purpose of this expansion was to increase its
capacity to process culled dairy cows and not fed cattle.

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in a competitive market. Instead, beef prices remained high while prices paid to cattle producers

decreased, indicating a collusive agreement among Operating Defendants.

178. In addition to Defendants reduced cash cattle purchases, each Operating

Defendant employed an antiquated “queuing convention” (as described below) during the

Conspiracy Period. That queuing convention served to limit producers’ ability to generate price

competition for their cattle.

179. The queuing convention, which operates predominantly in relation to those

cattle sold in the cash market, works as follows: once a cattle producer receives a bid from a meat

packer, such as Defendants, the producer may either accept the bid or pass on it, but may not

“shop” that bid to other packers, i.e. require competition for the bidding process. If another meat

packer offers the same bid as the original bidding Packer, the producer must give the original

Packer the right of first refusal.

180. The obligation to give a right of first refusal without consideration was

collectively imposed by Operating Defendants under the threat of boycott. Operating Defendants

have adhered to and enforced this queuing convention for decades, including during the

Conspiracy Period, and treat it as a mandatory industry custom.

181. On information and belief, one former feedlot manager, Matt T. (“Witness

2”), confirmed that the field buyers from Tyson Fresh (Brian Alsup), Swift (Levi Canales, and

prior to him, Chad Miller), CMS (Rick Vogel, and prior to him, Steve Brown), and National Beef

(Richard Duffy) who visited his feedlot enforced strict adherence to this convention with threats

of retaliation. In particular, each of these field buyers individually spoke to him about the

importance of his feedlot complying with the convention, and that they would not “come by”

anymore should he break with it.

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182. Witness 2 further reports that, when he took over management of the feedlot

in 2012, the feedlot would only receive bids from National Beef and CMS. When he subsequently

spoke to the field buyers from Tyson Fresh (Mr. Alsup) and Swift (Mr. Miller) responsible for his

region in the fall of 2012, they both told him that they had stopped visiting the feedlot because

Witness 2’s predecessor had broken with the convention by “shopping” their bids. Witness 2

reports that the Tyson Fresh and Swift field buyers recommenced visiting the feedlot after he

confirmed his commitment to following the queuing convention.

183. Witness 2 also heard from the Operating Defendants’ field buyers and other

industry participants about other producers being “blackballed” for breaking with the queuing

convention. In those circumstances, Witness 2 understood that the Operating Defendant who was

“on the cattle” would be tipped off as to the producer’s “breach” of the convention by the field

buyer whom the producer contacted while shopping the Operating Defendant’s bid, or would

pressure the producer for details of its sale.

184. As evidenced by the expanding meat margin, Operating Defendants

collectively refused to pass on any savings from their anticompetitive conduct toward the cattle

producers to Plaintiff, instead keeping the ill-gotten gains for themselves.

VI. EFFECTS OF DEFENDANTS’ ANTITRUST VIOLATIONS

A. Defendants’ Conspiracy Increased the Spread between Cattle and Beef Prices
185. Droughts from 2011 through 2013 caused fed cattle prices to steadily

increase. Predictably, wholesale prices of beef moved in tandem, maintaining a constant

relationship (or margin) between the two. As a result, Operating Defendants’ profits on average

were trimmed to margins of only 1 to 3 percent.

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186. The DOJ has recognized that when the beef market is functioning

competitively, a strong relationship exists between the supply of cattle and the price of beef

charged to direct purchasers:

[A]ll else being equal, when the meat packing industry reduces
production levels, feedlots and cattle producers are paid less for fed
cattle because fewer fed cattle are demanded and customers pay
more for [beef] because less is available for purchase. Because the
supply of fed cattle and demand for [beef] are relatively insensitive
to short-term changes in price, even small changes in industry
production levels can significantly affect packer profits. 52
187. Thus, in a competitive market, lower wholesale beef prices naturally follow

lower cattle prices. Once the conspiracy took hold, the spread between cattle and beef prices grew

significantly. Operating Defendants’ restriction of the beef supply caused cattle prices to slump,

while Operating Defendants charged direct purchasers for beef at elevated prices that would not

have existed in the market but for Operating Defendants’ artificial supply restraints.

188. Figure 4 is a graph constructed from published USDA data. It captures the

steep climb of the spread during the Conspiracy Period, which began after a period of very minimal

growth from 2012 to 2015:

52 U.S. v. JBS, Amended Complaint, ¶¶ 26-27.

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189. According to USDA Economic Research Service data, the average spread

between the average farm value of cattle and wholesale value of beef was substantially higher from

January 2015 to present than during the preceding five years. From 2010 to 2014, the average

farm-to-wholesale spread was about $34. But from 2015 to 2018, the average spread was about

$54—a 59% increase. The spread continued to balloon, by 2020 reaching about $71, a 109%

increase from the pre-conspiracy period average.

190. Operating Defendants’ ability to cut beef production while maintaining

inflated beef prices during the Conspiracy Period provides compelling circumstantial evidence of

their conspiracy. In a beef market free from collusion, if a competitor reduces its purchase of cattle,

other competitors quickly pick up the slack to boost their sales and increase their market shares.

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B. Tyson Foods and, Jointly, JBS S.A. and JBS USA Falsely Claimed Their
Record Profits Were Due to Market Prescience, Not Supply Constraints
191. Throughout 2017 and 2018, on earnings conference calls, executives from

JBS S.A. and Tyson Foods frequently attributed their historically high profits to their ability to

accurately foresee the volume of cattle that would enter the beef supply chain in the upcoming

years. Examples of these boasts include the following:

• On a Q3 2017 earnings call on August 7, 2017, Tyson Foods reported a

beef-business operating margin of 3.7 percent for the third quarter and
emphasized its confidence in the beef business going forward: “With ample
supplies of cattle, we see very good conditions for our beef business as far
out as 2020, as we enter the early stages of a multiyear expansion cycle.
Absent a shock to the system such as a drought or an import ban, our beef
business is well-positioned for profitable, long-term growth.” Tyson
acknowledged that it was considering raising its previously forecasted 1.5–
3 percent normalized operating margins. But despite ample supply of cattle
and high demand for beef, Defendants did not increase cattle purchases or
cattle slaughter.

• On a Q2 2018 earnings call on May 7, 2018, Tyson Foods announced

forecasted beef operating margins of 6 percent for the year—at least twice
its normalized operating margin range of 1.5–3 percent. Tyson claimed the
huge jump was attributable to “those cattle on feed reports and knowing that
the supplies in our region are exceptionally good.”

• On JBS S.A.’s Q1 2018 earnings call on May 15, 2018, JBS S.A. reported
an EBITDA margin of 6.1 percent for the quarter and forecasted that the
company would enjoy record beef margins for the next two quarters. JBS
USA’s CEO and President Andre Nogueira emphasized that its
performance was not based on “taking share from anyone.”

• On a Q3 2018 earnings call on August 6, 2018, Tyson Foods reported a beef

operating margin of 8 percent for the quarter. Tyson Foods stated that it had
an “optimistic outlook” because “we have good visibility into 2021 . . .
that’s good because we do see the number of animals that are out there.”

• On a Q2 2018 earnings call on August 15, 2019, JBS S.A. reported a beef
EBITDA margin of 10.2 percent for the quarter. JBS USA’s CEO and
President Andre Noguiera stated that it was “moving the overall margin in
beef [to] a different level that was in the past.” JBS added that it benefitted
from shutting several plants in the previous five years, and that it could not
see how U.S. beef could “be less profitable in 2019 compare [sic] how it is
going to perform in 2018.”

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• On a Q4 2018 earnings call on November 13, 2018, Tyson Foods reported

record beef operating margins of 8.9 percent for the quarter and 6.7 percent
for the year and stated that it expected similar results in the following years
thanks to visibility into cattle supply: “As we look at 2019, 2020, even in
2021 we frankly we don’t see a lot of change. The supply appears to be
relatively stable. We have a good sense of what that looks like just due to
the calf crop that gives us good visibility for at least a couple of years.”

VII. ADDITIONAL PLUS FACTORS SUPPORTING THE REASONABLE

INFERENCE OF DEFENDANTS’ CONSPIRACY
192. The beef meatpacking industry contains several characteristics, which

individually, or one or more in combination, make it conducive to cartelization. This plausibly

supports the inference that the alleged conspiracy existed. These characteristics, or “plus factors,”

include: (i) the ability to signal through public communications; (ii) high producer concentration;

(iii) high barriers to entry; (iv) commodity products; (v) inelastic demand; and/or (vi) opportunit ies

to collude. Each of the beef industry plus factors were present in 2015 (if not earlier) and

throughout the Conspiracy Period. These characteristics supported Operating Defendants’

collusion to constrain the number of cattle entering the supply chain, reduce and restrain the

volume of processed beef sold and raised, fix the wholesale price of beef, and maximize Operating

Defendants’ margins.

A. Operating Defendants Signaled Their Conspiracy and Encouraged Each

Other to Maintain the Conspiracy
193. One method that Operating Defendants used to coordinate, promote, and

monitor their conspiracy (evident now only with the benefit of hindsight afforded by the disclosure

of other now-apparent conspiratorial evidence) was to signal and discuss with each other their

activities and plans during earnings calls. Examples of some communications include the

following:

• During a May 2014 earnings call, JBS S.A. offered this industry forecast:
“For 2015, I think beef will keep being tight. I don’t see any big – an
increase in beef supply in 2015.”

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• During a May 2014 Q4 earnings call, Tyson Foods communicated that it

was striving for margin and not market share: “For FY15, we expect fed
cattle supply to be down 5% to 6% from last year, and we think we’ve
experienced the bottom of the beef supply cycle. After this year, we believe
we’ll see slow incremental improvement in supply. Our beef segment
results should improve in the back half of the year, and while profitable for
the year, FY15 results are expected to be below FY14. It is important to
remember that we’ll continue to run our beef business for margin, not
market share.”

• During Tyson Food’s Q4 2015 earnings call, Mr. Smith further

acknowledged that “You’ve got relatively low cattle supply, you’ve got too
much -- well, I should not say too much, that’s probably not the right way
to say it, but you’ve got excess industry capacity and that limits our ability
to drive margins above the 1.5% to 3%, we think.”

• On Tyson Foods’s August 3, 2015, Q3 earnings call, its CEO Donnie Smith
admitted it was underutilizing its plants, despite hurting its margins. When
discussing Tyson’s decreased purchases over the preceding quarter, Smith
noted that “[b]ecause we run for margin and not for market share, we’re not
willing to overpay for cattle and we’ve had to cut back on our hours at our
plants resulting in inefficiencies and added costs. In the short-term, we are
negatively impacted, but markets will equilibrate and conditions are
expected to improve for the long term.” He also admitted that “industry
capacity utilization [was] probably in the low 70s.” In response to a question
regarding the consequent impact of Tyson’s underutilization of its plant
capacity Mr. Smith elaborated: “In terms of quantifying the impact, we
know when we’re running 34s and 36s a week in our plants that that does
cost us. It raises the cost in our plant, makes us a lot less efficient, so it does
have a cost to us. I don’t know that I can quantify that right off the bat, but
it does impact margin.”

• On its November 12, 2015, Q3 earnings call, JBS USA’s CEO Andre
Nogueira de Souza publicly praised Defendants’ efforts to reduce
industrywide slaughter capacity through plant closures, remarking that “the
reduction that we saw in the cutbacks of production in U.S. that was with
the shutdown of nine plants the last two years reduced the cattle. (inaudible)
cost us [$3.5 million]. I think that will be a very good position balancing the
industry in 2016, 2017 and 2018.”

• On a May 2016 JBS S.A. Q1 earnings call, JBS USA’s CEO Mr. Nogueira
de Souza described the company’s supply strategy: “So I don’t see any
imbalance in this near future, even cattle is coming back and we’re going to
see a little bit more production of beef this year and next year. It’s still way,
way below how it was few years ago and we’ll be balancing at this side
because a lot of plant[sic] was shut but it’s too way below our historical
production level.”

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• On its November 2016, Q4 earnings call, Tyson Foods acknowledged the

widening of the meat margin: “The dynamic is that the livestock prices have
not come – they’ve come down faster than the retail prices have, which has
allowed us to make the margins that we have right now in both beef. . . .”

B. The Beef Market is Highly Concentrated

194. Market concentration facilitates collusion. Conspiracies are easier to

organize and sustain when only a few firms control a large share of the market. Practical matters,

such as coordinating cartel meetings and exchanging information, and monitoring compliance are

simpler with a small number of players.

195. In this case, high market concentration coupled with Defendants’

substantial collective market share in the beef market simplifies coordination because little outside

competitive presence exists to undermine the cartel, and Operating Defendants can more easily

monitor each other’s actions related to supply and pricing.

196. In a highly concentrated market, higher, long-term profits secured by the

cartel’s artificially elevated prices outweigh transitory gains in profits and market share that

producers might achieve by undercutting their cartel price.

197. The beef industry experienced significant consolidation leading up to and

during the Conspiracy Period. In 2001, Tyson Foods purchased IBP, Inc., then the nation’s largest

beef packer. In 2002, Cargill, Inc. purchased Taylor Packing Co. In 2007 and 2008, JBS USA

acquired Swift & Co. and Smithfield Beef Group, Inc., (renamed JBS Packerland, Inc. after the

acquisition), the third- and fifth-largest U.S. beef packers. JBS S.A. also sought to acquire

National Beef but decided to end the acquisition after a challenge by the United States Department

of Justice. The DOJ publicly stated that the takeover would result in lower prices paid to cattle

suppliers and higher beef prices for consumers at a time when the beef industry had become

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increasingly consolidated, with a handful of companies accounting for most of the nation’s beef

production.

198. Through these purchases, Operating Defendants collectively controlled

about 81–85% of the cattle slaughter market during the Conspiracy Period, while the next largest

meatpacker had only a 2–3% market share. Operating Defendants’ control of the market enabled

the conspiracy to launch no later than 2015 and prosper ever since.

C. The Beef Market Has High Barriers to Entry

199. Barriers to entry are obstacles that prevent new competitors from easily

entering a market. They restrict competition in a market and make it easier for incumbents to

collude.

200. A collusive arrangement that raises product prices above competitive levels

would, under basic economic principles, attract new entrants seeking to benefit from the profits to

be reaped from supra-competitive pricing. But where significant barriers to entry exist, new

entrants are less likely to enter the market. Thus, barriers to entry help to facilitate the formation

and maintenance of a cartel.

201. Barriers to entry have kept would-be competitors out of the beef-packing

industry. The construction of a large packing plant requires an investment of approximately $300

million. For example, in the summer of 2021, Cattlemen’s Heritage announced plans to build a

meatpacking plant at a cost of approximately $325 million. It normally takes about two years or

longer to plan and build such a facility, and the investment is not easily reversible or convertible

to other uses. Moreover, new entrants must also comply with numerous regulations, recruit and

train a large workforce, and develop and execute a successful marketing plan. Relative insulation

from the threat of new competitors has enabled Defendants to maintain their conspiracy.

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202. These barriers have caused any potential new entrants to file for bankruptcy

shortly after attempting to enter the market. These casualties include substantial enterprises, such

as Northern Beef Packers, LP, and Sam Kane Beef Processing, LLC. 53 Relative insulation from

the threat of new competitors has enabled Operating Defendants to maintain their conspiracy.

D. Beef is a Commodity Product

203. A commodity product is a basic item or good used in commerce that is

interchangeable with other goods of the same type. Commodities are most often used as inputs in

the production of other goods or services.

204. Markets for commodity products are susceptible to collusion. Demand for

a commodity depends primarily on price, as opposed to other attributes such as product quality or

customer service. As a result, cartel members can more easily monitor compliance and detect

defectors.

205. Price discrepancies for commodity products are more likely to expose

defection from a conspiracy because qualitative factors such as special product features, quality,

reliability, durability, and other terms of a transaction are unlikely to explain price discrepancies.

206. Beef is a commodity product. The USDA grades beef. For example, prime

beef roasts from Tyson and Cargill are virtually indistinguishable and have nearly identical

nutritional content. The USDA recognizes beef as a commodity and posts daily beef prices.

Options and futures for the cattle from which beef is produced are traded as commodities on the

Chicago Mercantile Exchange.

53 Northern Beef Packers LP filed under Chapter 11 in July 2013 and ceased operations before selling off
its assets in December of that year. “Northern Beef Packers sold to White Oak for $44.3 million,” The
National Provisioner, Dec. 9, 2013. Sam Kane Beef Processing filed under Chapter 11 in January 2019 and
was acquired by STX Beef Co. in February. “Kane Beef plant sale closes, new owner pledges to restart
operations,” Daily Adviser, Mar. 1, 2019.

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E. The Demand for Beef is Inelastic

207. Price elasticity describes the sensitivity of suppliers or consumers to

changes in the price of a good or service. Demand is inelastic if an increase in the price of a product

results in only a small decline in the demand for that product.

208. A cartel profits from raising prices above competitive levels when demand

is relatively inelastic at competitive prices. An increase in price for a product with inelastic

demand increases the seller’s revenue, while the reduction in output lowers costs. For a product

with elastic demand, increased prices would result in declining revenues, as customers purchase

substitute products or decline to buy altogether.

209. Inelastic demand is a market characteristic that facilitates anticompetitive

conspiracies because it allows producers to raise their prices without lowering sales volume or

triggering customer substitution to alternatives. Thus, from the standpoint of conspiring producers,

inelastic demand facilitates the profitability of supply-reducing conspiracy.

210. Beef demand is relatively insensitive to price changes. According to a recent

study of beef demand, “[s]ince beef has an inelastic demand, industry total revenue increases when

prices rise as there comparatively is a limited reduction in volume purchased.” 54

211. The same study concluded that the relative impact of pork and chicken

prices on beef demand is economically small. Operating Defendants’ supra-competitive prices to

its direct purchasers do not significantly reduce beef sales or lead purchasers to seek protein from

other meat sources.

54 Glynn Tonsor, Jason Lusk, Ted Schroeder, Assessing Beef Demand Determinants (Jan. 18, 2018), at 7-
9, https://www.beefboard.org/wp-content/uploads/2019/06/Assessing-Beef-Demand-
Determinants_FullReport.pdf.

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F. Defendants Had Multiple Opportunities to Collude

212. Operating Defendants are members of industry trade associations and

forums and regularly attend industry events, including the events listed below. If rivals are together

at trade association meetings and exchange competitively sensitive information or agree on the

production, pricing or sale of a good or service, then the antitrust laws are implicated. Further,

because trade groups necessarily bring together competitors ostensibly for purposes of trade

association activities, such trade groups and their activities provide cover for competitors to

collude with seeming impunity. As noted earlier, discovery will be necessary to determine the full

extent of Defendants’ communications at or through trade association activities in furtherance of

the conspiracy. However, as demonstrated below, Defendants had multiple opportunities to

collude at various trade association meetings.

213. For example, the National Cattlemen’s Beef Association (“NCBA”) holds

an annual convention, CattleCon, during which various meetings take place. 55 The NCBA Product

Council, which includes Defendants’ representatives and representatives from other packers,

meets quarterly for the invitation-only Beef Executive Forum. For example, two of Defendants’

executives, former CMS/Cargill Vice President of Cattle Procurement Bill Thoni and former

Tyson SVP of Beef Margin Management and VP of Boxed Beef Pricing Kevin Hueser, were both

officers, board members, or formally designated participants of the NCBA during the Conspiracy

Period. Defendants also participate in meetings of the Beef Checkoff program run by the

Federation of State Beef Councils, held contemporaneously with the NCBA summer and winter

meetings.

55 NCBA Allied Industry Membership, NAT’L CATTLEMEN’S BEEF ASS’N (2019),

https://convention.ncba.org/ .

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214. The U.S. Meat Export Federation (“USMEF”) is another example of a trade

association at which Defendants regularly met during the Conspiracy Period. The USMEF

develops export opportunities for U.S. protein producers and holds both spring and fall conferences

and monthly international trade shows. 56 USMEF leadership includes current and former

employees and officers of Defendants. For example, former CMS/Cargill Vice President of

International Sales Pat Binger was an officer, board member, or formally designated participant of

the USMEF; former Tyson Foods SVP of International Sales Roel Andriessen served as the Chair,

Vice Chair, and on the Executive Committee of the USMEF; former Tyson Foods SVP of

International Sales and VP International Sales Robert Shuey was a formal participant of the

USMEF; National Beef International President and former Vice President of International Sales

Peter Michalski served on the Export Committee of the USMEF; and former National Beef NBP

International Sales President Mark Domanski served on the Export Committee of the USMEF.

Also, in November 2017, Tyson’s SVP of International Sales and CMS’s VP of International Sales

both attended the USMEF Strategic Planning Conference in Tucson, Arizona. 57

215. Defendants were among the founding members of the Global and U.S.

Roundtables for Sustainable Beef, and they remain members. Defendants participate in its annual

meetings each spring, and JBS and Cargill have leadership positions in some of the working

groups.

216. Defendants also met for multiple meetings, conferences, conventions, and

expositions sponsored by the North American Meat Institute (“NAMI”) and its predecessor, the

56 Events: Meetings, U.S. MEAT EXP. FED’N (2019), http://www.usmef.org/events/bod-meetings/;

Events: Trade Show Calendar, U.S. MEAT EXP. FED’N (2019), http://www.usmef.org/events/trade-
shows/.
57 USMEF Members Examine Challenges ahead, Elect New Officer Team, U.S. MEAT EXP. FED’N
(Nov. 3, 2017), https://www.usmef.org/news-statistics/member-news- archive/usmef-members-examine-
challenges-ahead-elect-new-officer-team/ .

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American Meat Institute. NAMI is a national trade association that represents companies that

process 95% of red meat. 58 Executives and employees of Defendants also participated and held

leadership positions in the NAMI. For example, CMS President of Business Operations & Supply

Chain and former Cargill Beef President John Keating was an officer, board member, or formally

designated participant of the NAMI; former Tyson Foods CEO, Group President of Fresh Meats

& International, and COO Noel White served on the Executive Committee of the NAMI; former

Tyson Foods CEO and President Thomas Hayes also served on the Executive Committee of the

NAMI; National Beef President and CEO Timothy M. Klein served on the Executive Committee

of the NAMI; and JBS USA CEO Andre Nogueira served on the Board of Directors of the NAMI.

217. The NAMI and the Food Industry Association host an annual Meat

Conference, which various executives and employees of Defendants attend every year. 59 In 2017,

National Beef’s President and CEO, Timothy Klein, Tyson Vice President of Boxed Beef Pricing

Don Kieffer, JBS USA‘s Andre Nogueira, and CMS Vice President of Sales John Jay, amongst

other Defendant executives, were listed as attendees of the Meat Conference. 60 In 2018, National

Beef’s Timothy Klein, JBS USA’s Andre Nogueira, Cargill Vice President of Retail Beef Business

Lead Elizabeth Gutschenritter, and Tyson’s Don Kieffer attended the Meat Conference. 61 In 2019,

JBS USA’s Andre Nogueira, Tyson’s Noel White, National Beef’s Timothy Klein, and Cargill’s

58 See About NAMI, NAT’L AM. MEAT ASS’N (2019),

https://www.meatinstitute.org/index.php?ht=d/sp/i/204/pid/204; Events, NAT’L AMERICAN MEAT
ASS’N (2019), https://www.meatinstitute.org/index.php?ht=d/sp/i/10422/pid/10422.
59 Meat Conference, NORTH AM. MEAT INST. AND FOOD INDUS. ASS’N,
http://meatconference.com/ (last visited Dec. 9, 2020).
60 2017 Annual Meat Conference: Registered Attendees, FOOD INDUS. ASS’N (Dec. 9, 2020)
https://www.fmi.org/forms/meeting/MeetingRosterPublic/viewRoster?meetingId=43A35
D00000DFE&sortBy=name.
61 2018 Annual Meat Conference Attendee List as of 2.9.2018, MEAT CONFERENCE (Feb. 9, 2018),
http://meatconference.com/sites/default/files/books/2018%20AMC%20Attendee%20List. pdf.

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Elizabeth Gutschenritter were listed as attendees. 62 In 2020, Tyson’s Noel White and National

Beef’s Timothy Klein again signed up to attend the Meat Conference, along with various other

Cargill and JBS executives and employees. 63

218. Until April 2017, NAMI sponsored an annual Meat Industry Management

Conference, which offered topics such as economics and general business. That conference was

then replaced by an annual Meat Industry Summit. This summit has sponsored “networking

opportunities and social events,” including a golf tournament, receptions, an “Issues, Answers,

Actions Breakfast,” the annual NAMI board meeting, and what one publication described as

“closed door committee meetings to discuss policies and association business.” The 2017 summit

included a presentation by John Nalivka of Sterling Marketing entitled “Economic Outlook for the

Red Meat Industry,” described as an “analysis of supply and demand and price forecasts” to “cover

all aspects of the supply chain, and help your business prepare for the years ahead.”

219. The beef industry’s Annual Meat Conference, described on the event’s

website as “a complete education and networking experience,” provides another opportunity for

Defendants to confer. Many of Defendants’ high-level executives have been attending this

conference for years. The list of registered attendees in 2012, for example, included eight

executives from JBS, Tyson Foods’s then-CEO Donnie Smith, and twelve other Tyson executives.

220. Defendants’ executives and employees also attended “AgCon,” a joint

conference from the Commodity Futures Trading Commission and the Center for Risk

62 Meat Conference 2019 Attendee List (as of 2/27), MEAT CONFERENCE (Feb. 27, 2019),
http://meatconference.com/sites/default/files/books/2019-AMC-Attendee-List.pdf.
63 2020 Annual Meat Conference: Registered Attendees, FOOD INDUS. ASS’N (Dec. 9, 2020),
https://www.fmi.org/forms/meeting/MeetingRosterPublic/viewRoster?meetingId=571D81000004FF&inc
ludeUnpaid=1&sortBy=title.

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Management Education and Research at Kansas State University, in 2018. 64 CMS’s and Tyson’s

executives were listed as attendees of the 2018 AgCon, along with other Defendants’ executives

and employees, including Tyson Fresh’s VP of Sourcing & Risk Management; Tyson Fresh’s VP

of Cattle Procurement; National Beef’s Vice President of Cattle Procurement; National Beef’s

Vice President of Procurement and Risk Management; and JBS USA’s Head of Risk

Management.65

221. Executives from Tyson, JBS, and Cargill also had ample opportunities to

meet privately, particularly at the beginning of the conspiracy as a result of JBS’s acquisition of

Tyson and Cargill’s Mexican and Brazilian chicken and U.S. pork operations, respectively. JBS

S.A.’s purchase of Tyson’s Brazilian and Mexican chicken operations was announced on July 28,

2014 and closed on December 1, 2014 and June 29, 2015, respectively,66 while its purchase of

Cargill’s U.S. pork operations was announced on July 1, 2015 and closed on October 30, 2015.

Cargill, Tyson, and JBS executives with responsibilities relating to beef and cattle, such as then-

Tyson CEO and President Donnie Smith,67 JBS USA CEO Andre Nogueira,68 and then-Cargill

Senior Vice President Todd Hall69 were all involved in the acquisition discussions. JBS S.A.’s

CEO Wesley Batista stated in July 2015 that its “courtship” with Cargill in relation to its U.S. pork

64 Inaugural AgCon brings business, government together to discuss ag futures markets, KANSAS
STATE UNIV. (Mar. 8, 2018), https://www.ksre.k-state.edu/ news/stories/2018/03/AgCon2018.html.
65 2018 AgCon Attendees, KANSAS STATE UNIV. (Mar. 28, 2018), https://www.k-
state.edu/riskmanagement/documents/Ag_Con_2018_Attendees_ Mar30.pdf.
66 JBS Foods Int’l B.V., Registration Statement (Form F-1) at 112 (Dec. 5, 2016),
https://www.sec.gov/Archives/edgar/data/1691004/000119312516785274/d304020df1.htm.
67 Tyson to sell Mexico, Brazil poultry businesses to JBS, REUTERS (July 29, 2014, 1:32 p.m.),
https://www.reuters.com/article/us-tyson-foods-results/tyson-to-sell-mexico- brazil-poultry-businesses-to-
jbs-idUKKBN0FX0UR20140729.
68 Lawrence Aylward, Inside the JBS, Cargill deal, MEAT + POULTRY (July 2, 2015),
https://www.meatpoultry.com/articles/13164-inside-the-jbs-cargill-deal.
69 Press Release, Cargill, JBS USA Pork agrees to purchase Cargill Pork business (July 1, 2015),
https://www.cargill.com/news/releases/2015/NA31861255.jsp.

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operations “started years ago,” with discussions intensifying at the beginning of 2015, coinciding

with the start of the Conspiracy Period. 70

222. These events afforded Defendants’ top executives and other employees

frequent opportunities to discuss pricing, production, and other proprietary information in

furtherance of the conspiracy in an informal setting and monitor compliance with their conspiracy.

G. Defendants Exacerbated Their Supply Restraints by Continuing to Reduce

Their Imports
223. Defendants did not offset their slaughter reductions by importing more

cattle into the United States. Rather, imports continued decreasing in 2015 and throughout the

Conspiracy Period. Figure 9 captures this trend:

Figure 9.

70 Luciana Magalhaes, With Cargill Purchase, Brazil’s JBS Poised to Become No. 2 Pork Producer in
U.S., WALL ST. J. (July 2, 2015, 3:18 p.m.), https://www.wsj.com/articles/with-cargill-purchase-brazils-
jbs-poised-to-become-no-2- pork-producer-in-u-s-1435864508.

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224. Furthermore, certain Defendants shuttered international plants, thereby

decreasing the supply of cattle available to be imported into the United States, which could

otherwise have offset Operating Defendants’ conspiratorial reductions.

225. Operating Defendants’ reduced domestic slaughtering and reduced cattle

imports for slaughter combined to raise above competitive levels beef prices paid by Plaintiff,

through its assignors.

H. Defendants’ Market Share Stability is Indicative of a Conspiracy

226. In a competitive market, market shares typically fluctuate as producers

compete for and gain business from each other. Relatively stable market shares over time is a “plus

factor” plausibly supporting the alleged conspiracy.

227. Although relative market-share stability in a commodity market does not

itself prove collusion, it strongly suggests operation of an effective cartel that has agreed not to

compete. A marked decline in market-share volatility over time may suggest a conspiracy in a

previously competitive market.

228. On information and belief, Operating Defendants’ relative market shares,

measured by wholesale beef sales, became more stable after 2014 and during the Conspiracy

Period. The same is true for Operating Defendants’ market shares as measured by slaughter

capacity.

229. Operating Defendants did not attempt to capture each other’s market share

or lower prices as their costs declined, as would be expected in a competitive market.

230. As described in Section V.B., Operating Defendants reduced their output

and capacity to produce beef for sale to Plaintiff, through its assignors. In a competitive market,

the reduction in output by one producer typically presents an opportunity for competitors to capture

market share in the face of constant or increasing demand.

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231. But instead, Operating Defendants reduced their output to limit beef supply,

which increased beef prices. By acting in collusion to advance their conspiracy, Operating

Defendants sacrificed potential individual gains via increased market share for larger collective

gains for all via increased prices and profit at the expense of Plaintiff. Figure 10 demonstrates

Operating Defendants’ overwhelming dominance of the market for the purchase of fed cattle.

Figure 10.
Operating Defendants’ Share of Annual U.S. Fed Cattle Slaughter Volumes

I. The Production Cuts Were Implemented Despite Surging Beef Demand

232. Operating Defendants’ joint slaughter management was not a reaction to

changes in beef demand. Tyson Fresh’s Head of Cattle Procurement, John Gerber, admitted at a

November 2018 industry conference:

“[The] [c]onsumer will pay more for beef, and have to pay more for
beef because it is worth more. There is value out there in chicken
and pork, but unless you have been living under a great big rock the

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last two years, you know that beef demand is off the charts. We
have a lot of supply coming at us, but we have been able to hold the
price at a pretty good level, because of beef demand, it’s been really
good, and I think it will stay good.71
Significantly, no Operating Defendant broke from the group’s collective, anticompetitive restraint

to buy more cattle and capture this “off the charts” demand for beef.

233. By February 2019, beef demand was “terrific” and, in ordinary times, would

encourage packers to compete to secure more cattle and run plants to meet customers’ demand. 72

234. This strong beef demand trend continued into the fall of 2019, where the

“voraciousness of beef demand [surprised] pretty much everyone in the business.” 73

235. As shown in Figure 11 below, beef demand rebounded from its low in 2013.

Beef demand not only remained strong during the Conspiracy Period, but, actually, steadily

increased from its prior lows in the immediate pre-collusion period, as is also evident from Figure

11 below.

71 Tyson Fresh Meats: What the Consumer Demands - John Gerber, VP, Cattle Procurement, Tyson
Foods; Kevin Hueser, VP, Beef Pricing, Tyson Foods, from the 2018 NIAA Antibiotic Symposium: New
Science & Technology Tools for Antibiotic Stewardship, November 13-15, 2018, Overland Park, KS, USA,
https://www.youtube.com/watch?v=qCip3WBcqzo.
72 Cassandra Fish, How About That, THE BEEF (Feb. 11, 2019),
https://www.thebeefread.com/2019/02/11/how-about-that-3/ (“Rather obviously, beef demand is terrific.
Even in February, notoriously a slow beef demand month. Packer margins are record wide for February.”).
73 Cassandra Fish, Packers Press and Cash Softens, THE BEEF (August 9, 2019),
https://www.thebeefread.com/2019/08/09/packers-press-and-cash-softens/.

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Figure 11. Monthly Beef Demand Indices, Jan. 1988 – Nov. 2020

VIII. THE BEEF INDUSTRY FACES GOVERNMENTAL INQUIRIES AND

INVESTIGATIONS
236. In August 2019, the USDA opened an investigation into the beef industry

following a fire at Tyson’s Holcomb, Kansas plant. The USDA took notice after the reduction in

available supply simultaneously caused cattle prices to fall while elevating beef prices.

237. On March 19, 2020, U.S. Senators Mike Rounds of South Dakota, Kevin

Cramer and John Hoeven of North Dakota, and Steve Daines of Montana sent a letter to the DOJ

urging the department to launch an investigation into price-fixing in the cattle market. The authors

highlighted Defendants’ harm to both upstream producers and downstream consumers.

238. On a conference call reported in the press, Senator Rounds stated the request

was for the DOJ “to definitively answer whether a packer oligarchy exists within the cattle market

and inherently creates an anti-competitive marketplace that unfairly disadvantages the cattle

producer and the consumer.” Senator Rounds further commented, “These margins just don’t make

any sense. The reality is there is an inverse correlation between the producer’s price and the

consumer’s price.”

239. On April 8, 2020, Reuters reported that the USDA had extended its existing

investigation to include the observed pricing dynamic in which Defendants paid reduced prices to

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ranchers for cattle coupled with surging retail beef prices. The USDA extended its investigation

in the wake of announced production shortages associated with the nationwide COVID-19

outbreak.

240. On April 17, 2020, state-level cattle production trade associations from 23

states signed a letter to then-Attorney General William Barr requesting that the DOJ coordinate

with the USDA and launch its own investigation into “fraudulent business practices within the

meatpacking industry.” Signatories included the Minnesota State Cattlemen’s Association.

241. The letter described the two extraordinary pricing episodes, identified by

the USDA, that occurred following the Holcomb fire and during the COVID-19 outbreak. The

state trade associations not only reported their own situation but also observed that: “The nature

of previous and current concern in both situations is extreme market degradation to the producer

segment quickly followed by sharp increases and unseasonable profitability to the packing

segment through boxed beef prices.”

242. With respect to the most recent manipulations, the letter explained that: “We

are now seeing that same type of price action [observed after the Holcomb fire] repeated—only in

a more extreme manner and during a time of crisis that includes logistical stressors on the nation’s

food production and distribution system. Indeed, in the last analysis, Defendants’ conduct portends

more than mere profiteering. If left unchecked, it will remain a direct and gathering threat to the

country’s food security during the current crisis.”

243. On May 5, 2020, 11 state attorneys general, including the Montana attorney

general, signed a joint letter to then-Attorney General Barr urging the DOJ to open a coordinated

federal antitrust investigation into “anticompetitive practices by the meat packers in the cattle

industry.” This letter noted that: “Cattle ranchers . . . often struggle to survive. Consumers,

moreover, do not realize the benefits from a competitive market.”

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244. On June 4, 2020, Bloomberg reported that the DOJ had served civil

investigative demands on Tyson Foods, JBS S.A., Cargill, Inc., and National Beef in connection

with an investigation into antitrust violations consistent with the earlier requests by the producer

trade associations and state attorneys general.

245. In a letter dated May 17, 2021, sixteen members of the Senate and

Congress, including Senator Daines and Congressman Matthew Rosendale, Sr. of Montana, urged

Attorney General Merrick Garland to continue the DOJ investigation into the nation’s four biggest

meatpackers and provide Congress with updates. The letter also noted that the fire at the Tyson

Holcomb, Kansas facility “created significant market disruptions.”

IX. ANTITRUST INJURY

246. The cattle market is an oligopsony consisting of the Operating Defendants,

which purchase most of the cattle for slaughter and produce most of the beef sold in the wholesale

market. When Operating Defendants colluded to restrict supply, the market effectively became a

monopsony that left Plaintiff with no choice but to accept whatever price Operating Defendants

offered.

247. In a competitive market, the volume of cattle purchased by beef producers

(such as Defendants) would equal the volume where supply matches the demand/marginal revenue

product curve, and the price for that cattle would be the additional revenue that the producers

would receive for cattle.

248. When Operating Defendants collaborated to restrict supply, they exercised

their monopsony power to compel Plaintiff to accept the price Operating Defendants offered, thus

driving down the market price. In this manner, Operating Defendants’ monopsony power enabled

them to maximize their profit by purchasing fewer cattle at a lower price.

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249. Further, because imported beef was not offsetting the shortages that

Operating Defendants created, the restricted supply of cattle caused a restricted supply of beef in

the downstream market to direct purchasers like Plaintiff, through its assignors.

250. From the standpoint of direct purchasers of commodity beef, such as

Plaintiff, through its assignors, Operating Defendants function as an oligopoly in control of most

of the industry supply. When Operating Defendants colluded to restrict supply, the market for beef

became a monopoly in which direct purchasers were forced to buy at prices dictated by Operating

Defendants who acted in concert.

251. Because no other source was offsetting the shortages, Operating Defendants

created the restricted supply of fed cattle, which, in turn, restricted the supply of beef in the

downstream market to direct purchasers. Operating Defendants exacerbated this restriction

through their concerted manipulation of slaughter capacity and processing volume.

252. Because Operating Defendants had and have accompanying downstream

market power, they were able to maximize their profits by colluding to produce volumes based on

their marginal revenue curve instead of the market demand curve, which increased prices that

Plaintiff, through its assignors, paid.

253. Because Operating Defendants did not fear competition from other

meatpackers, Operating Defendants’ collusion had the dual effect of (a) artificially decreasing the

price that Operating Defendants paid for cattle; and (b) artificially increasing the price they charged

for their beef products.

254. Operating Defendants’ monopsony power and anticompetitive conduct had

the following effects, among others:

• price competition in the beef market was restrained or eliminated;

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• prices for beef sold by Operating Defendants, their divisions, subsidiaries,

and affiliates, and co-conspirators, and, in turn, other beef producers, were
raised, maintained, and fixed at artificially high, noncompetitive levels
throughout the United States;

• direct purchasers of beef were deprived of free and open competition; and

• direct purchasers paid artificially inflated prices.

255. The purpose of Operating Defendants’ and their co-conspirators’ conduct

was to raise, fix, or maintain the price of beef above a competitive level. As a direct and foreseeable

result, Plaintiff, through its assignors, paid supra-competitive prices for beef during the Conspiracy

Period.

256. Defendants’ violations of the Sherman Act caused Plaintiff to suffer injury

to its businesses or property.

257. This harm is an antitrust injury of the type that the antitrust laws were

designed to punish and prevent.

X. DEFENDANTS FRAUDULENTLY CONCEALED THEIR CONSPIRACY

258. Defendants took affirmative actions to fraudulently conceal their conspiracy

from Plaintiff through at least the filing of the first related complaint.

259. Defendants used various means and methods to fraudulently conceal their

conspiracy from Plaintiff, including, but not limited to secret meetings, surreptitious

communications between Defendants by telephone or in person meetings to prevent the existence

of written records, statements to Plaintiff designed to deceive Plaintiff about the real factors

involved in the prices that Plaintiff paid for beef, and not disclosing their supply-restraint

agreement in communications or documents.

260. As set forth above, Defendants engaged in secret behaviors intended to

further their conspiracy. Defendants’ conspiracy – based on behaviors known only to Defendants

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to be unlawful at the time they performed them – plausibly suggest that Defendants engaged in a

fraudulent concealment campaign.

261. Defendants concealed their illegal behavior from Plaintiff by, among other

measures:

• communicating privately by telephone or text about their purchases and

slaughter volumes so to avoid creating a paper trail as well as relying on
nonpublic forms of communication;

• offering false or pretextual explanations for the low fed cattle prices;

• providing pretextual justifications for their plant closures, slaughter

reductions, and withdrawal from the cash cattle trade;

• explicitly and implicitly representing that the beef bids and contract terms
offered to Plaintiff, through its assignors, was the product of honest
competition and not a conspiracy;

• misrepresenting that Defendants complied with applicable laws and

regulations, including antitrust laws; and

• misrepresenting the nature of Defendants’ agreements (and purported

adherence to competitive safeguards) to government officials and the
public.
262. During the Conspiracy Period, Defendants also affirmatively

misrepresented their compliance with antitrust laws. For example:

• Tyson’s Code of Conduct states that “[w]e compete in the market with
integrity and comply with competition laws [and w]e comply with the letter
and spirit of competition laws (also referred to as “antitrust” laws) wherever
we do business.”

• JBS’s 2014 Annual Report asserts that the company has clear policies “[t]o
ensure ethical conduct and integrity in the management of its business,”
including a Manual of Ethical Conduct “that addresses issues related to
violations, conflicts of interest, third-party contracts, employment practices,
receiving gifts, decision making, anti-corruption practices, and other
sensitive topics.”

• Cargill stressed in its 2015 Corporate Responsibility report that “[w]e obey
the law. Obeying the law is the foundation on which our reputation and

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Guiding Principles are built…We conduct our business with integrity…We

compete vigorously, but do so fairly and ethically. We . . . comply with the
laws and regulations that support fair competition and integrity in the
marketplace.” Cargill reaffirmed this commitment in subsequent Corporate
Responsibility reports.

• National Beef’s former majority shareholder, Jefferies Financial Group,

acknowledged in its 2014 Annual Report that National Beef was “subject to
extensive government regulations,” including by the USDA.
263. Regarding Cargill, Inc.’s, JBS S.A.’s, and Tyson Foods’s conduct involving

false or pretextual statements or issued false or pretextual financial data, Cargill, Inc. did so for

the benefit of CMS, JBS S.A. did so for the benefit of JBS USA, Swift, and Packerland, and Tyson

Foods did so for the benefit of Tyson Fresh because, had these parent Defendants not continually

cloaked Operating Defendants’ conspiracy, the entire conspiracy would have been unable to

operate. Indeed, these parent Defendants told and perpetuated many of the lies that fueled

Operating Defendants’ conspiracy and allowed it to operate.

264. In addition to Defendants’ affirmatively concealing their conspiracy,

Defendants’ conspiracy was inherently self-concealing because it depended on secrecy for its

successful operation.

265. Defendants also misrepresented the real reasons for their plant closures,

slaughter reductions, and withdrawal from the cash cattle trade as follows:

1. The Cargill Defendants

266. As discussed above, the Cargill Defendants shared a unity of corporate

interest and operated as part of a single enterprise to advance their conspiracy.

267. To facilitate Defendants’ conspiracy, Cargill, Inc. made public statements

offering pretextual explanations to conceal Defendants’ unlawful activity. For example, Cargill,

Inc. used its 2017 Annual Report to explain that “[r]enewed consumer demand for beef [produced]

favorable market conditions in North America.”

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268. The following year, Cargill, Inc. proclaimed that its Animal and Nutrition

& Protein segment’s “strong performance” in 2018 was “fueled by rising domestic and export

demand for North American beef” rather than because of Defendants’ anticompetitive conduct.

269. Cargill, Inc. made these false public statements to conceal its role and

participation in the conspiracy alleged in this Complaint. Instead of disclosing that its “strong

performance” stemmed from the illegal behavior and tainted profits, Cargill, Inc. provided

pretextual business justifications such as “favorable market conditions” and “rising domestic and

export demand.”

2. The JBS Defendants

270. As discussed above, the JBS Defendants shared a unity of corporate interest

and operated as part of a single enterprise to advance the conspiracy.

271. To facilitate the conspiracy, JBS USA made public statements to conceal

Defendants’ unlawful activity. For example, in November 2015, JBS USA CEO Andre Nogueira

declared that “[c]attle price will go down” in the United States because “we are going to see more

cattle available.”

272. Similarly, on an earnings call in March 2016, JBS S.A.’s founder and CEO

Wesley Mendonca Batista, stated that JBS would see “better margin[s]” due to an “increase in the

herd in the U.S.”

273. JBS executives made similar statements throughout 2016 and 2017 and into

2018, regularly claiming that JBS’s strong financial performance in the United States was a result

of “more cattle available in the U.S.,” “cattle price[s being] back to the normal level,” and “strong

demand for beef.”

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274. On earnings calls, JBS offered pretextual business justifications for its

“improvement in EBITDA margin” and favorable financial projections/results, instead of

disclosing that they were there result of Defendants’ conspiracy.

3. National Beef
275. To facilitate the conspiracy, National Beef, through its majority

shareholders Jefferies Financial Group Inc. (until 2018 when it sold a majority of its stake) and

later Marfrig Global Foods S.A. (“Marfrig”), used public statements to conceal Defendants’

unlawful activity.

276. For example, in October 2015, Jefferies stated that the anticipated

expansion of the cow herd “bodes well for [meatpacking industry] margins as it will lead to an

increase in the number of fed cattle available for slaughter.”

277. In October 2016, Jefferies explained that the “rebuilding of the domestic

US cattle herd ha[d] dramatically affected the market for fed cattle” when justifying how, “[f]rom

June 27, 2015 to June 25, 2016, the average market price per pound of fed cattle ha[d] fallen from

$1.48 to $1.16.”

278. Jefferies offered similar pretextual justifications throughout 2017 and 2018,

such as “National Beef generated record results for [the last 12 months] on the back of a more

balanced supply of cattle and robust end market demand,” “an increased supply of cattle in 2017

has driven higher margins and greater capacity utilization versus 2016,” “pre-tax income grew by

$78.3 million, as increased cattle availability and strong demand for beef continued to support

strong margins,” and “because the peak in supply of fed cattle ready for slaughter lags the peak

size of the beef cowherd, throughput should continue to increase for at least the next several years,

supporting continued above-average packer margins.”

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279. These statements were made during Jefferies Investor Day presentations in

2015, 2016, and 2017, at which National Beef’s CEO and President, Tim Klein, was scheduled to

speak on topics related to National Beef’s performance.

280. Marfrig similarly offered false justifications for high beef prices and low

cattle prices caused by the conspiracy after Marfrig acquired a controlling stake in National Beef.

281. For example, Marfrig reported in November 2018 that, “[i]n the United

States, the cattle availability combined with stronger domestic and international demand has been

supporting better margins.”

282. In 2018, during a third-quarter company earnings call, Marfrig executives

reiterated the preceding paragraph’s point by claiming that “the U.S. beef industry has delivered

record results” because of “an ample supply of cattle” and “strong demand in both the domestic

and international markets.” Although Marfrig declared that it had attained record results and better

margins while reducing cattle slaughter volumes, it misrepresented that these results were due to

“fewer weeks in the third quarter 2018 compared to the third quarter 2017.”

283. National Beef’s CEO, Timothy M. Klein—referred to by Marfrig CEO,

Eduardo de Oliveira Miron, as “CEO of [Marfrig’s] North American Operations”—participated in

the 2018 call.

284. Marfrig announced in the fourth quarter of 2018 that it attained a “[s]olid

result from North America Operation, sustained by strong demand for beef protein and the higher

cattle availability.”

285. Jefferies and Marfrig made these pretextual public statements on behalf of

National Beef—which, as alleged above, was the original source of the pretextual public

statements—to obscure their role and participation in the conspiracy. Instead of disclosing that

their record results and better margins stemmed from the illegal prices implemented by the

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conspiracy, Jefferies and Marfrig claimed these results were due to ample supply of cattle, higher

cattle availability, and strong demand.

4. The Tyson Defendants

286. As discussed above, the Tyson Defendants shared a unity of corporate

interest and operated as part of a single enterprise to advance the conspiracy.

287. To facilitate the conspiracy, Tyson Foods made public statements to conceal

Defendants’ unlawful activity. For example, Tyson Foods used its SEC filings from 2015 to 2018

to declare that it had “limited or no control” over the pricing and production of cattle because

prices were “determined by constantly changing market forces of supply and demand.”

288. As for the factors that influence the cost of cattle, Tyson identified “weather

patterns throughout the world, outbreaks of disease, the global level of supply inventories and

demand for grains and other feed ingredients, as well as agricultural and energy policies of

domestic and foreign governments.”

289. Tyson further stated that it “ceased operations at our Denison, Iowa plant”

to “better align our overall production capacity with current cattle supplies.” Tyson claimed that

“[t]he beef segment earnings improved . . . due to more favorable market conditions associated

with an increase in cattle supply which resulted in lower fed cattle costs.”

290. Rather than truthfully disclosing that the conspiracy improved its earnings,

Tyson Foods issued false business justifications such as lower fed cattle costs and favorable market

conditions. Tyson Foods made these misrepresentations to cover up its role and participation in

the conspiracy.

291. Defendants made these pretextual statements to mislead Plaintiff into

believing Defendants were acting legally, because, by concealing their conspiracy, Defendants

were able to reap supra-competitive profits.

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B. Plaintiff’s Claims are Timely

292. Plaintiff had neither actual nor constructive knowledge of Defendants’

conspiracy during the time covered by the statute of limitations. Plaintiff, through its assignors,

and other similarly situated direct purchasers did not discover, and could not have discovered

through the exercise of reasonable diligence, the existence of the conspiracy alleged herein until

the filing of the cattle ranchers class action, In re Cattle Antitrust Litigation, in this District on

May 7, 2019. Defendants engaged in a secret conspiracy that did not reveal facts that would put

Plaintiff on inquiry notice about the existence of the conspiracy alleged in this Complaint.

Throughout the Conspiracy Period, Defendants effectively, affirmatively, and fraudulently

concealed their unlawful combination and conspiracy from Plaintiff.

293. Plaintiff only learned about Witness 1, as recently as April 7, 2019, upon

the filing of cattle ranchers’ Complaint. Witness 1 offers direct evidence that Defendants have

been colluding to fix prices.

294. Plaintiff did not learn and could not have learned, about the USDA and DOJ

investigations into price fixing in the beef industry as early as March 12, 2020. Plaintiff did not

learn and could not have learned about the USDA and DOJ investigations into price fixing in the

beef industry at any time before March 12, 2020, when Secretary of Agriculture Sonny Perdue

announced that the USDA had begun an investigation into suspiciously high beef prices as alleged

above, and thus did not have any facts that would have reasonably put them on inquiry notice

regarding the existence of the conspiracy.

295. Before Witness 1’s accounts were revealed by the cattle ranchers’ complaint

and the revelation of the government’s investigations, Plaintiff did not have facts that existed that

would have put them on reasonable notice, or inquiry notice, of the existence of Defendants’

conspiracy. Accordingly, a reasonable person under the circumstances would not have been alerted

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to begin investigating the legitimacy of Defendants’ beef prices and conduct before these recent

revelations.

296. Further, throughout the conspiracy, Plaintiff engaged in due diligence in seeking to

ensure that it was receiving competitive pricing for beef. For example, and without limitation,

Plaintiff used a method of purchasing beef – including, for example and without limitation, seeking

price quotes and bids from their suppliers and/or investigating reasonably available public

information – that caused it to believe in good faith that at the time that it was receiving competitive

prices for beef that it purchased from Defendants and co-conspirators.

297. Plaintiff’ claims are also timely by virtue of tolling by, among other means,

operation of law.

C. Plaintiff Exercised Due Diligence in Attempting to Discover their Claim74

298. Plaintiff could not have learned of Operating Defendants’ anticompetitive

conduct until recently after public disclosures regarding Witness 1 and the existence of

governmental investigations. Market conditions that Operating Defendants ascribed to legal

behavior did not put Plaintiff on inquiry notice.

299. Operating Defendants’ concealment was successful—that is, because of

their concealment, Plaintiff was unable to discover the existence of their antitrust claim.

300. Because of Operating Defendants’ fraudulent concealment, Plaintiff had

insufficient information concerning Operating Defendants’ misconduct on which to base a

Complaint and could not have discovered Operating Defendants’ conspiracy.

301. Defendants affirmatively made public statements giving pretextual reasons

for their record profits.

74 Since due diligence is an affirmative defense, Plaintiff need not necessarily plead it here but does.

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302. Because of Defendants’ misrepresentations, and Defendants’ success and

precision in cloaking their illegal behavior, Plaintiff lacked reasonable awareness of suspicious

circumstances or storm warnings sufficient to trigger the duty to investigate.

303. A reasonable person would not have discovered the conspiracy through any

of Defendants’ statements. As such, the most reasonable time for Plaintiff’s duty to inquire to arise

was not until after Witness 1’s revelations and indication of the government’s antitrust

investigations became known.

XI. DEFENDANTS ENGAGED IN CONTINUING ANTITRUST VIOLATIONS

304. Independent of Defendants’ fraudulent concealment, which tolled the

statute of limitations on Plaintiff’ claims, Plaintiff’ Sherman Act claims are timely because the

statute of limitations period was restarted each time Defendants committed an overt act.

305. From the start of their conspiracy, Defendants sold beef to Plaintiff at prices

that were artificially raised above the competitive level, resulting from Defendants’ continually

renewed and adjusted unlawful agreement.

306. Defendants’ conspiratorial meetings and misrepresentations, as alleged

above, were each among the new and independent overt acts in furtherance of the conspiracy that

restarted the statute of limitations each time they occurred because they advanced the objectives

of Defendants’ conspiracy and inflicted new and accumulating injury on Plaintiff. Indeed, every

statement involved different facts and suggestions yet sprang from the same seed – Defendants’

conspiracy.

307. Defendants’ conduct during the conspiracy, including, without limitation,

coordinating the price to pay suppliers for fed cattle and/or slaughter volumes, were each also new

and independent acts in furtherance of the conspiracy that inflicted new and accumulating injury

on Plaintiff.

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308. Each sale of beef by a Defendant to Plaintiff at a supra-competitive price

was also a new and independent overt act in furtherance of the conspiracy and an antitrust violation

that injured Plaintiff and reset the applicable statutory period.

309. Defendants’ overt acts, or one or more of them in combination, including,

but not limited to those alleged above, were new and independent acts that perpetuated their

agreement and kept it current with market conditions; they were not merely reaffirmations of

Defendants’ previous acts. By constantly renewing and refining their agreement (and overt acts

such as those alleged in this Complaint) to reflect market conditions, Defendants inflicted new and

accumulating injuries on Plaintiff.

A. Defendants Inflicted New and Accumulating Injury on Plaintiff

310. Each purchase by Plaintiff through the Conspiracy Period of Operating

Defendants’ beef, the price of which resulted from Operating Defendants’ continually renewed

and adjusted price-fixing agreement, necessarily caused new and accumulating injury to Plaintiff.

311. As the concept of a continuing violation applies to a price-fixing conspiracy

that brings about a series of unlawfully high-priced sales over a period of years, each sale to

Plaintiff, through its assignors, starts the statutory period running again regardless of Plaintiff’s

knowledge of the alleged illegality at much earlier times. This means that each illegally priced sale

of beef to Plaintiff, through its assignors, constituted a new cause of action for purposes of the

statute of limitations.

312. Operating Defendants’ conspiracy continued into the non-time-barred

Conspiracy Period—that is, four years before the first cattle ranchers class action Complaint was

filed and alternatively four years before the filing of the first direct purchaser class action

complaint.

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313. As alleged throughout this Complaint, Operating Defendants’ price fixing

began in at least 2015, and many of Plaintiff’s factual assertions allege Operating Defendants’

2015 misconduct. But Plaintiff also alleges that Operating Defendants’ misconduct continued

throughout the Conspiracy Period.

314. Many of Operating Defendants’ illegal acts occurred in 2015 and continued

throughout the Conspiracy Period. See supra Section V.B. and Figures 1–3, 7-8 (describing

Defendants’ overt illegal acts beginning in 2015 and extending into the four-year period before the

earlier related cattle ranchers class action Complaint was first filed and alternatively four years

before the filing of the first direct purchaser class Complaint).

315. Plaintiff alleges that Operating Defendants constantly coordinated and

communicated with each other beginning in 2015 and throughout the Conspiracy Period. The fact

that they maintained such communications makes plausible the allegation that their conspiracy

continued from 2015 through the present. See supra Sections V.B. and VI.B. (describing

coordination and communications among Operating Defendants in 2015 and continuing

throughout the Conspiracy Period). In this manner, Operating Defendants’ conspiracy continued

when their sales to Plaintiff, through its assignors, were made during the four years preceding the

filing of the first related cattle ranchers class action Complaint, and in the alternative, during the

four years preceding the filing of the first direct purchaser class Complaint.

316. Each of the beef industry’s plus factors were present in 2015 and throughout

the Conspiracy Period: high market concentration, commodity product, inelastic demand, high

barriers to entry, and trade association meetings that occurred each year and provided the

Operating Defendants the continual opportunity to conspire.

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317. Moreover, Defendants’ conspiracy was intended to and did inflict

continuing harm on Plaintiff as a result of their collective reduction and restraint on the supply of

processed beef.

318. In addition, to the extent that the Operating Defendants’ conspiracy was

intended to and did have the effect of reducing and restraining supply, it had a continuing effect

because it takes 24 to 33 months to raise cattle for slaughter, and that does not include the

processing time.

319. Finally, this Complaint alleges that Operating Defendants sold beef directly

to Plaintiff, through its assignors, during the Conspiracy Period.

XII. VIOLATIONS OF SECTION 1 OF THE SHERMAN ACT, 15 U.S.C. § 1

320. Plaintiff incorporates and realleges all preceding paragraphs.

321. “The Sherman Act was designed to be a comprehensive charter of economic

liberty aimed at preserving free and unfettered competition as the rule of trade,” and “the policy

unequivocally laid down by the Act is competition.” Northern Pac. Ry. Co. v. United States,

356 U.S. 1, 4 (1958); see also NCAA v. Alston, 141 S. Ct. 2141, 2144 (2021) (“In the Sherman

Act, Congress tasked courts with enforcing a policy of competition on the belief that market forces

‘yield the best allocation’ of the Nation’s resources.”).

322. “The Sherman Act adopted the term ‘restraint of trade’ along with its

dynamic potential,” which “refers not to a particular list of agreements, but to a particular

economic consequence, which may be produced by quite different sorts of agreements in varying

times and circumstances.” Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 731-32

(1988); see also Mandeville Island Farms v. Am. Crystal Sugar Co., 334 U.S. 219, 236 (1948)

(“The [Sherman] Act is comprehensive in its terms and coverage, protecting all who are made

victim of the forbidden practices by whomever they may be perpetrated.”).

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323. Therefore, the Sherman Act reaches any concerted scheme to affect prices.

See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 222 (1940) (The Sherman Act covers

“agreements to raise or lower prices whatever machinery for price-fixing was used.”). Its target is

any of the “many forms of restraint upon commercial competition” which “tend to raise prices or

otherwise take from buyers or consumers the advantages which accrue to them from free

competition in the market.” Apex Hosiery, 310 U.S. 469, 495, 497 (1940).

324. Beginning at a time yet to be determined but at least as early as 2015 and

continuing in force and effect, or both, thereafter, Defendants and their co-conspirators entered

and engaged in a continuing agreement, understanding, and conspiracy in unreasonable restraint

of trade to artificially fix, raise, increase, and/or stabilize the wholesale price for beef sold to

Plaintiff, through its assignors, in the United States at artificially elevated levels, in unreasonable

restraint of trade and commerce in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.

325. The contract, combination and conspiracy among Defendants and their co-

conspirators described in the immediately preceding paragraph consisted of a continuing course,

pattern and practice of conduct regarding the pricing and production of fed cattle, and the sale

price of beef, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.

326. Defendants’ acts in furtherance of their contract, combination or conspiracy

in restraint of trade described above were authorized, ordered, or done by their officers, agents,

employees, or representatives while actively engaged in the management of Defendants’ affairs.

327. The course, pattern and practice of conduct described above included,

among other things, a continuing agreement, understanding and concert of action among

Defendants and their co-conspirators, the substantial terms and purpose of which were one or more

of the following: (a) to fix, stabilize, maintain and/or increase the price of beef sold to Plaintiff,

through its assignors, and others in the United States; (b) to allocate the volume of beef sales in

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the U.S. and/or market shares of beef sales and/or purchased fed cattle; (c) to control slaughter

volumes and/or beef supply in the U.S.; and/or (d) to earn supra-competitive profits on the price

of beef sold to Plaintiff, through its assignors, and others in the U.S. that resulted from Defendants’

collusion.

328. In order to formulate and effect the foregoing unlawful combination and

conspiracy, during the Relevant Period, Defendants and their co-conspirators engaged in one or

more of the overt acts alleged above in this Complaint: (a) they agreed to exchange, and did

exchange, current and/or future information concerning cattle slaughter volume, prices to purchase

fed cattle, and/or the prices of beef sold to purchasers in the U.S.; (b) they agreed to coordinate,

and did coordinate, price levels, price terms, and/or price movements for purchase of fed cattle

and/or the sale of beef sold in the U.S.; (c) they agreed on prices, price levels, margin levels, and/or

production or slaughter levels of fed cattle and/or beef sold in the U.S.; and/or (d) they agreed to

fix, raise, maintain and/or stabilize, and did fix, raise, maintain and/or stabilize, the wholesale price

of beef sold to Plaintiff, through its assignors, and others in the United States.

329. Defendants and their co-conspirators entered into and refined their unlawful

combination or conspiracy through, among other conduct, the overt acts detailed above.

330. As a result of Defendants and their co-conspirators’ conspiracy in violation

of Section 1 of the Sherman Act, 15 U.S.C. § 1, during the Relevant Period: (a) price competition

among Defendants and their co-conspirators in the sale of beef to Plaintiff, through its assignors,

and others in the U.S. was (and continues to be) restrained, suppressed and/or eliminated; (b) prices

for beef sold by Defendants, their divisions, subsidiaries, and affiliates, and their co-conspirators,

to Plaintiff, through its assignors, and others, were (and continue to be) fixed, raised, stabilized,

and/or maintained at artificially high, non-competitive levels throughout the United States; and/or

(c) Plaintiff, through its assignors, who directly purchased beef from Defendants, their divisions ,

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subsidiaries, and affiliates, and co-conspirators, were (and continue to be) deprived of the benefits

of free and open competition in the purchase of beef.

331. Defendants’ anticompetitive acts described in this Complaint had a direct,

substantial, and foreseeable effect on interstate commerce by raising, increasing, maintaining

and/or fixing beef prices throughout the United States because Defendants sell their beef in every

state.

332. The conspiratorial acts and combinations alleged above have caused (and

continue to cause) unreasonable restraints in the beef market.

333. Plaintiff has been injured in its business or property by reason of

Defendants’ and their co-conspirators’ antitrust violations alleged in this Complaint in amounts

not yet ascertained. Plaintiff’s injury as a direct purchaser of beef is an injury of the type the

antitrust laws were designed to prevent and flows from that which makes Defendants’ and their

co-conspirators’ conduct unlawful.

334. Plaintiff is entitled to an injunction against Defendants to prevent and

restrain the violations alleged.

XIII. REQUEST FOR RELIEF

WHEREFORE, Plaintiff requests that the Court grant the following relief:

A. Adjudge that the conspiracy and the acts done by Defendants and their co-
conspirators in furtherance thereof violate Section 1 of the Sherman Act, 15
U.S.C. § 1;

B. Enter judgment for Plaintiff against Defendants for three times the damages
sustained by Plaintiff as a result of Defendants’ violations of Section 1 of
the Sherman Act and costs of this action, including reasonable attorneys’
fees, as permitted Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15
and 26;

C. Award Plaintiff prejudgment and post-judgment interest at the highest legal

rate from commencement of this proceeding, to the extent allowed by law;

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D. Permanently enjoin Defendants and their co-conspirators, affiliates,

successors, transferees, assignees, officers, directors, partners, agents and
employees, and all other persons acting or claiming to act on their behalf or
in concert with them, from continuing, maintaining or renewing the
conduct, conspiracy, or combination and from entering into any other
contract, conspiracy, or combination having a similar purpose or effect, and
from adopting or following any practice, plan, program, or device having a
similar purpose or effect caused by any further violation of the antitrust
laws; and

E. Such other and further relief as the Court may deem just and proper under
the circumstances.

XIV. JURY TRIAL DEMANDED

Plaintiff demands a trial by jury according to Rule 38(b) of the Federal Rules of

Civil Procedure of all issues so triable.

Dated: October 4, 2024

/s/ Philip J. Iovieno

Philip J. Iovieno
Nicholas A. Gravante, Jr.
Lawrence S. Brandman
Jack G. Stern
Mark A. Singer
Justin V. Arborn
Elizabeth R. Moore
CADWALADER, WICKERSHAM & TAFT LLP
200 Liberty Street
New York, NY 10281
Tel: (212) 504-6000
Fax: (212) 504-6666
E-mail: [email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]

Attorneys for Plaintiff McDonald’s Corporation

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