A jury ruling in November 2023 finally put to rest a price-fixing case that was filed in 2011. The jury found that four of the US’ largest egg suppliers conspired to reduce the egg supply in order to raise egg prices. The jury found that between the years 2004 and 2008 the egg suppliers engaged in activities such as exporting supply to reduce supply in the domestic market and reducing the number of egg-laying chickens.
The case was brought by a group of food manufacturers, including General Mills and Nestle. They argued that they suffered damages due to the price-fixing scheme because of their increased production costs. The jury awarded the plaintiffs $17.7 million in damages, but the Justice Department may triple that amount under anti-trust regulations.
Discussion Questions:
- Explain why cartels are likely to fail without legal authority to compel members to maintain the agreement.
- Describe the difference between collusive and competitive outcomes in terms of consumer surplus, producer surplus, and market efficiency.
Sources| Reuters: https://www.reuters.com/legal/litigation/us-jury-awards-177-mln-kraft-other-producers-egg-price-fixing-case-2023-12-01/; AP News: https://apnews.com/article/egg-producers-price-gouging-lawsuit-conspiracy-8cd455003a3a40bab74d0f046d0f2c9d; Unsplash: Photo by Madison Oren on Unsplash