5. Remarkably, in responding to the R-CALF lawsuit, the Big Four have attempted to rebut the allegations of explicit collusion, not by denying that they acted in parallel, but by arguing that the concentrated structure of beef and cattle markets made such parallel conduct inevitable. Since “fed cattle and beef markets are concentrated commodity markets,” no active collusion was necessary because it was in each packer’s self-interest to monitor the others’ reactions to market prices and “respond similarly.” 6. This pattern of conduct admitted by the Big Four is consistent with longstanding economic research showing that, when the largest four firms control 50% or more of a market, the “intense fewness and interdependence” of the leading firms pushes them to behave “as if they were really just parts of one dominant firm” — creating a “shared monopoly” that maximizes their joint profits at the expense of suppliers, consumers, and small rivals. Through this kind of tacit collusion, the Big Four have — to use the words of the complaint brought by McDonalds — been able to act like “a single enterprise” and turn “the market for beef [into] a monopoly.”

1. The Big Four created the cattle shortage they are complaining about by suppressing the price of cattle paid to ranchers to levels below the cost of production over the past two decades. Since the Big Four became entrenched in their control of the Nation’s cattle and beef markets in the late 2000s, they have used a suite of tools — including concerted plant shutdowns, beef imports from their foreign operations, and manipulation of captive cattle supplies — to depress the price of cattle while propping up the price of beef. As a result, between 2010 and 2021, the inflation-adjusted mark-up charged by meatpackers above the cost of cattle more than doubled and the three biggest meatpackers (JBS, Tyson, and Cargill) saw their average quarterly profit margins increase three-fold. Meanwhile, the average annual return on cattle feeding received by producers went from a profit of about $5 per head in the 2000s, down to a loss of about $35-40 per head in the 2010s, and down to an even greater loss of $60-70 per head in the early 2020s. In this context, sustained financial losses have driven more than 150,000 feedlots out of business over the past 20 years and eliminated the incentive for remaining producers to expand cattle output — ultimately causing the Nation’s cattle herd to shrink to approximately 85 million head, its smallest size in 75 years. 2. For example, as recent lawsuits brought by cattle producer association R-CALF as well as large corporations like McDonald’s and Sysco have alleged, from 2009 to 2014 the Big Four were paying steadily increasing prices for cattle. This was due to a natural shortage of cattle brought on by drought, which had spurred cattlemen to reduce their herds. The Big Four responded to the higher prices by closing a total of five plants in quick succession between January 2013 and September 2014, including one of Cargill’s largest plants in Plainview, Texas, which processed more than 4,500 head per day — roughly 5% of all beef production in the country. Ranchers and small feedlot owners with full-grown, fattened cattle didn’t have space or feed to wait out a dip in buying, so they were forced to accept a lower price. By November 2014, cattle prices had leveled off. 3. Before the parallel shutdowns by the Big Four, industry experts widely projected that cattle prices would remain steady in 2015 and for several years after, before experiencing a gradual decline as the drought eased and the inventory of cattle was replenished. But, according to the lawsuits, the Big Four didn’t want to wait for cattle prices to come down on their own. Emboldened by the effectiveness of their parallel shutdowns, the lawsuits allege, the Big Four colluded to make sure the period of elevated prices in cattle markets would be cut short. They came up with a system in which the heads of operations at all of the Big Four directly communicated with each other to temporarily halt cattle buying whenever cattle prices got too high. Because the Big Four controlled so much of the market, the lawsuits allege, even a temporary reduction of kills immediately depressed market prices. When those prices hit an agreed-upon level, the Big Four simultaneously resumed buying. The alleged scheme worked so well that prices for cattle across the US collapsed dramatically in 2015 and then stabilized at levels below the prior trendline. 4. This collusion, according to the lawsuits, increased “the meat margin” — the spread between the price paid by the Big Four for fed cattle (cattle fattened in feedlots and ready for slaughter) and the price they charged to wholesale customers for beef. “Even with the drastic collapse in fed cattle prices caused by [the Big Four’s] conspiracy,” the R-CALF lawsuit states, the meatpackers “continued to benefit from record beef prices,” allowing them “to post record per-head meat margins” throughout the late 2010s.