In 2022, McDonald’s came under fire for charging $16 for Big Mac meals in some cities. At the time, McDonald’s made vague references to supply chain problems and promised to do better. Now, it seems that the iconic fast food giant is ready to fight back. What’s the beef? Well, in a recently filed lawsuit against Big Meat, McDonald’s claims that Big Meat is violating antitrust regulations and illegally price fixing. The suit names four companies, Cargill, Tyson, JBS, and National Beef Company, and accuses them of anticompetitive behavior. The four companies control about 80 percent of the total U.S. packaged beef market.
McDonald’s claims that Big Meat used a price fixing scheme in which the companies colluded to limit the supply of packaged meat products effectively forcing prices up. McDonald’s argues that this amounts to anticompetitive behavior and is illegal. Why? According to McDonald’s, Big Meat’s actions created a monopoly situation in which buyers had no choice but to purchase at prices dictated by sellers. The burger giant notes that prices at the live cattle stage of the supply chain have remained relatively stable, but that the price of packaged products has risen significantly in just a few years. McDonald’s believes that the collusion on the part of Big Meat left it little choice but to raise burger prices, a decision that has subjected the burger maker to ridicule and lower sales.
Discussion Questions:
1. McDonald’s alleges that Big Meat has been engaging in anticompetitive behavior, and more specifically, price fixing. What is price fixing? Why does McDonald’s claim that it is anticompetitive behavior?
2. What is a monopoly? How does a monopoly situation impact buyers and end users? Does the meat packing industry meet the definition of a monopoly? Explain.
3. What is the Sherman Act? Do you agree with McDonald’s that Big Meat has violated the Sherman Act?
Sources| AP News: https://apnews.com/article/mcdonalds-sues-meat-packers-beef-price-fixing-6ea9d046eb711fd2a93d03305fa07882; Finance Yahoo News: https://finance.yahoo.com/news/mcdonald-sues-major-beef-producers-153648797.html; CNN: https://edition.cnn.com/2023/11/27/business/mcdonalds-burger-economy-nightcap/index.html; Washington Post: https://www.washingtonpost.com/food/2024/10/08/mcdonalds-beef-lawsuit-price-fixing/; Unsplash: Photo by Brett Jordan on Unsplash