Federal Prosecutors Investigate Possible Food Price Collusion

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Federal Prosecutors Investigate Possible Food Price Collusion

Federal prosecutors have opened separate criminal probes into possible price-fixing by major egg producers and California tomato processors, The Wall Street Journal reported on Tuesday. The probes are the latest in a string of investigations into alleged collusion in food and agriculture. Federal agencies are already pursuing criminal or civil inquiries in such markets as fertilizer, cheese, and milk, to examine whether suppliers helped to manipulate prices.

"[The Wall Street Journal report is] amusing to us. This issue's been around since late March," Mark Witmer, treasurer and secretary of Minnetonka, Minn.-based Michael Foods Inc. told Progressive Grocer. Michael Foods is the world's largest egg processor, with 2007 sales of $1.6 billion. "We filed our first-quarter Form 10Q and don't have much to add to that." Witmer said his company has received subpoenas and responded fully, but "the government is not sharing where they're going.

The criminal investigation focuses on the pricing and marketing of egg products such as liquid and powdered eggs, lawyers and industry executives said. Egg producers Golden Oval Eggs, LLC and MorArk, LLC, a unit of Land O'Lakes Inc., were also named in the report. According to The Wall Street Journal, both companies received subpoenas. Golden Oval said it's cooperating with the U.S. inquiry. MoArk is also cooperating, noting that it sold its egg-processing business but remains in fresh eggs.

In the unrelated tomato-industry probe, a federal grand jury in Sacramento, Calif. has issued subpoenas and Federal Bureau of Investigation agents are interviewing executives of big California tomato processors. Officials are trying to determine if processors of tomatoes for canning, ketchup, salsa, and sauces conspired to fix prices, according to The Wall Street Journal.

Investigators are also looking into alleged efforts by the Dairy Farmers of America to restrict competition, lawyers close to that case say. The big dairy cooperative is also under investigation by federal regulators for alleged manipulation of cheddar cheese futures prices at the Chicago Mercantile Exchange. According to The Wall Street Journal, the dairy cooperative says it hasn't violated antitrust law and is cooperating.