June 27, 2019 / 3:30 PM / 4 months ago

UPDATE 2-Judge gives U.S. a role in chicken price-fixing civil case amid criminal probe

(Adds judge's comments, background, case citation, bylines)

By Tom Polansek, Barbara Smith and Jonathan Stempel

CHICAGO/NEW YORK, June 27 (Reuters) - A federal judge on Thursday allowed the U.S. government to intervene in long-running litigation in which grocers, retailers and consumers accused Tyson Foods Inc, Pilgrim's Pride Corp and other poultry processors of conspiring to inflate chicken prices.

U.S. District Judge Thomas Durkin in Chicago granted the government's intervention request after the Department of Justice said last week it had launched a criminal probe related to price-fixing allegations, which the poultry processors have denied.

"The government's now in the case," Durkin said at a hearing.

Justice Department lawyers had said intervening would protect the integrity of a grand jury investigation into the matter, and minimize the degree to which the civil litigation brought by customers could interfere with any criminal case.

They also said the customers, and obviously the poultry processors, did not adequately represent its interests, including if criminal charges were pursued.

The civil litigation began in 2016, when upstate New York food distributor Maplevale Farms and others accused poultry processors of conspiring since as early as 2008 to "fix, raise, maintain, and stabilize" prices for broiler chickens, which account for most chicken meat sold in the United States.

According to the plaintiffs, some collusion related from Agri Stats, a service that enabled processors to review rivals' production and pricing data and use that information, which should have been confidential, in their own decision-making.

Kraft Heinz Co, Kroger Co, Walmart Inc and food distributor Sysco Corp are among the customers that have been involved in the civil litigation.

Two other large processors, Sanderson Farms Inc and Perdue Farms, are among the defendants in that litigation, which has comprised more than three dozen lawsuits.

Pilgrim's Pride is owned mostly by Brazilian meat packer JBS SA.

In Thursday's hearing, Durkin also ordered an immediate three-month halt of parts of the customer litigation, including subpoenas and depositions from employees, and said he would need a "very compelling" reason to extend it.

The Justice Department had sought a broader six-month stay. Some customers thought that was too long and unfair, though they had no objection to the government's intervention.

In late morning trading, Tyson shares were down 0.8%, Pilgrim's Pride was up 1.4% and Sanderson Farms was little changed.

The case is In re Broiler Chicken Antitrust Litigation, U.S. District Court, Northern District of Illinois, No. 16-08637. (Reporting by Tom Polansek and Barbara Smith in Chicago and Jonathan Stempel in New York; Editing by Tom Brown and Marguerita Choy)

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