Broiler Chicken Antitrust Litigation

In the mid 1990’s, Texas Plastics (the company) began the process to merge with Biscuit Foods, which became Arco Products in 2004 after their master distribution system agreement with Arco Products terminated in 2007. At some point prior to this, the Arco Products executives and supervisors met with representatives of the Chicken Industry Association and asked questions about the chicken industry’s need for a coordinated federal system of food inspection. Chicken Industry Association was “really taking care of our guys” and it was critical that the system be established to recognize the difference between certain chicken products that could and could not be sold to public markets in such different ways in different states. As well, the chicken industry had an immediate need to gain access to federal insurance and the law and procedure for the filing and adjudication of antitrust claims existed to do so.

Based upon this advice, the Arco Products executives and supervisors attended several hearings when they asked questions and also adopted recommendations from industry experts and also from the U.S. Department of Justice. Based upon what the Arco Products officials said and did at these hearings and the discussions they had with various regulators and witnesses from the U.S. Department of Justice and the Department of Labor, the Arco Products executives and supervisors proposed a consolidated package of many federal statutes and regulations designed as a “collaborative national system” (CNS) intended to regulate the way in which poultry was processed and prepared for sale into a grocery market and the way that such poultry was inspected, prepared and marketed.

The U.S. Department of Labor never took immediate action in response to the Arco Foods and Arco Products recommendations and in 2004 the ARCO officials invited a conference call of ARCO officials and staff, which included representatives from all of the most important poultry businesses to formulate and recommend new guidelines that would provide further protection of consumers and provide efficiencies in the testing and inspection process. Based upon this meeting, the chicken industry, which had experienced significant delays in making decisions and obtaining certainty and was concerned that any new rules would be detrimental to the industry, was in a very heightened state of fear and was actively seeking resolution to the “national concern.