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United States District Court for the District of Minnesota
August 8, 2019, Decided; August 8, 2019, Filed
Civil No. 18-1776 (JRT/LIB)
AMENDED MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS PLAINTIFFS' COMPLAINTS
Plaintiffs (separated into three putative classes) allege that Defendants, some of the nation's leading pork producers and integrators, conspired to limit the supply of pork in order to fix prices in violation of state and federal antitrust laws. Defendants now move to dismiss the claims against them. Because Plaintiffs have not adequately pleaded parallel conduct sufficient to support an inference of conspiracy, the Court will grant Defendants' Motions and dismiss Plaintiffs' Complaints without prejudice. The Court will, however, grant Plaintiffs leave to amend their Complaints.
This class action embodies the consolidation of thirteen separately filed actions. The Plaintiffs [*4] are grouped into three different classes of pork purchasers: Direct Purchaser Plaintiffs ("DPPs"), Consumer Indirect Purchaser Plaintiffs ("IPPs"), and Commercial and Institutional Indirect Purchaser Plaintiffs (CIPs"). Each group consists of individuals or companies who have either directly or indirectly purchased pork products from one of the Defendants.1 Each class has filed a separate, consolidated complaint, alleging that the Defendants conspired with one another to increase the price of pork products.2 Because the factual allegations in each of the three complaints are nearly identical, the Court will consider them interchangeably.
I. FACTUAL BACKGROUND
A. Ability and Motivation to Collude
The pork industry is "horizontally concentrated (only a few companies buy, slaughter, and process the majority of hogs) and vertically integrated." (Civ. No. 18-1803, DPP Compl. ¶ 76, Aug. 17, 2018, Docket No. 83.) The top four participants—Defendants Smithfield, Tyson, JBS USA, and Hormel—control an almost 70 percent market share. (Id. ¶ 77.) Smithfield and JBS USA each control over 20 percent of the market, and Tyson controls 18 percent. (Id. ¶ 80.) Taken together, the top eight participants, [*5] all of whom are Defendants in this case, control over 80 percent of the market. (Civ. No. 18-1776, IPP Compl. ¶ 113, Aug. 17, 2018, Docket No. 74.) The top eight participants have maintained their dominant position in the market for most of the last twenty years. (Id. ¶ 118.)
The sustained market concentration inherent in the pork industry is due in part to the significant barriers to entry placed on new competitors. For example, building a new facility can cost hundreds of millions of dollars. (DPP Compl. ¶ 84.) Accruing such capital can be difficult, which works to dissuade potential competitors. (IPP Compl. ¶ 122.) Another barrier to competitor entry is the unique nature of the industry itself. Most of the largest pork integrators do not produce their own pigs but instead enter into contracts with independent farmers who raise the pigs until they are ready to be slaughtered. (DPP Compl. ¶ 70.) Because "[m]ost of the hogs produced in the U.S. are sold under a multi-year contract," it is difficult for any potential competitor to find pigs to purchase. (Id. ¶ 85.)
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2019 U.S. Dist. LEXIS 133165 *; 2019-2 Trade Cas. (CCH) P80,878; 2019 WL 3752497
IN RE PORK ANTITRUST LITIGATION. This Document Relates To: All Actions.
Subsequent History: As Amended August 8, 2019.
Prior History: In re Pork Antitrust Litig., 2019 U.S. Dist. LEXIS 20038, 2019 WL 480518 (D. Minn., Feb. 7, 2019)
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