An Illinois federal jury consisting of nine men and three women decided on Tuesday, in a significant move, that major food companies such as General Mills Inc., a Kraft Heinz Co. unit, Kellogg Co., and Nestle SA had been overpaying for eggs for years. Allegedly, this was caused by a conspiracy to restrain the supply of eggs by the nation’s largest producers and two trade groups. The jury ruled that the two largest U.S. egg producers, Cal-Maine Foods Inc. and Rose Acre Farms Inc., along with the two trade groups, would have to pay damages to the food companies.
A trial is set to begin on November 29 to ascertain the amount of damages to be paid, with proceedings expected to last two days. The jury, however, is not informed that according to law, any damages that they award will be trebled.
This case outcome could potentially encourage other plaintiffs to seek redress against food producers for anticompetitive behavior. “We are incredibly pleased by the jury’s decision,” stated Brandon Fox, a Jenner & Block LLP partner representing the food companies. Further adding, “For the first time, the defendants have been held liable for their antitrust violations. We are now going to turn our attention to the damages phase.”
In the past, plaintiffs including grocery stores and other direct purchasers were unable to convince a jury that the egg producers were fixing the egg price. However, this time the jury wholly favored the plaintiffs, agreeing their allegations that a conspiracy to reduce supplies and thus hike egg prices was in existence and was institutionally enacted through means such as reducing hen population and promoting egg exports to restrict U.S. egg supply. Moreover, the jury concluded that these practices unreasonably restrained trade in the egg market, contravening federal antitrust laws.
However, the jury did not find proof that every egg producer tied to industry trade groups had taken part in the conspiracy. Furthermore, they declared that the companies had not sustained any damages from the years 2009 to 2012, as they had claimed.
Despite the case’s contentious nature, the presiding U.S. Judge Steven Seeger commended the attorneys from both sides, describing their conduct as some of the best advocacy he has ever witnessed during his tenure on the bench.