Who's involved, Whats alleged, and lawsuit updates.
Consumer Potato Cartel Class Action Lawsuit incoming
McCain Foods Ltd., Cavendish Farms Corp. and Lamb-Weston sued in potato cartel
lawsuit.
These companies have been named in a lawsuit that was filed in
Chicago federal court by Redner's Markets Inc. A consumer class
action lawsuit in the same court addressing similar concerns is also
in the works.
The four companies named in the lawsuit have been accused of a
price fixing scheme that allegedly started as early as January
2021. For those of you who aren't aware a price fixing scheme is
an illegal practice where companies or businesses agree to set prices
at a certain level instead of allowing market forces to determine the
price. This leads to consumers paying more than they should for goods
or services as the involved companies are not competing honestly.
This is a particularly egregious case since the accused companies are
massive international corporations that significant market power and influence.
Considering these companies have such a large market share smaller companies are
unable to compete due to economies of scale. This leads consumers to be dependent
on the prodcuts manufactured by the accused.
According to a research paper completed by Ani L. Katchova, Ian M. Sheldon and Mario J. Miranda,
The "frozen-potato sector, which is dominated by frozen French fries production, the four-firm
concentration ratio is reported to be 80%". The largest firm in this industry is Lamb-Weston.
Lamb-Weston has an estimated market share of over 20%. These firms sell primarily to to giants
such as McDonalds and Burger King.
The issue with such high concentration in an industry is that it leads to a lack of competition.
This reduces the pressure on companies to innovate or offer better prices, which ultimately harms consumers.
For example, if one company sets high prices, others tend to follow suit, leading to inflated costs across the board.
This is particularly evident in the potato sector, where the economy of scale of these massive corporations
make it difficult for new or smaller producers to enter the market and compete fairly.
Soaring Costs
The cost of frozen potato products increased by roughly 50
percent from 2022 - 2024, despite input costs declining by 33% during
that same time period. This gap between input costs and prodcut prices was
used to support the claims of price fixing by the defendants. In a free and competitive market a
significant drop in input prices should lead to lower prices for the consumers. This suggests
that the companies involved deliberately maintained these elevated prices.
As consumers, we should be able to trust that the prices we pay for everyday products, like frozen potatoes,
are determined by the natural forces of supply and demand. However, when large companies manipulate prices
to suit their own financial interests, it distorts the market and harms the average consumer.
It's crucial that consumers understand how these practices affect their wallets and advocate for a more competitive market.
National Potato Council
All four companies that have been accused belong to the National Potato Council
which markets itself as the "advocate for the economic well-being of
potato growers on federal legislative, regulatory,
environmental, and trade issues." So essentially it's a lobbiest
group that pretends to act on the behalf of consumers and farmers but in reality it
was used as a forum for these corporations to conspire and line thier pockets at the expense
of farmers and consumers.
The National Potato Council claims to support the interests of potato growers and industry stakeholders,
but it is alleged that it has been used to shield the large corporations from scrutiny and lobby on their behalf.
This has raised serious questions about the true role of the council and its influence on agricultural policies.
If the lawsuit succeeds, it could have far-reaching implications not just for the potato industry, but for lobbying practices
in general, highlighting the need for greater transparency and accountability.
