[HDThoreaun]

That's not a better excuse than what they had before. The question is why didn't competition undercut them to keep prices low as it had before. Food company excuses don't matter, people will continue to buy the product they perceive as having the best value.

[ceejayoz]

> The question is why didn't competition undercut them to keep prices low as it had before.

This question is answered by the title of the article.

[AnimalMuppet]

Didn't that cartel exist in 2020? So, once again, why now?

[nerdponx]

If you ran a cartel, what would your biggest fear be? If it were me, my biggest fear would be getting regulated out of existence, or maybe even being criminally prosecuted. So you want to keep a low public profile for your cartel activity.

If you start ratcheting up prices without an excuse, eventually people would notice, and at some point "people" would start to include state and federal legislators, who will start asking uncomfortable questions and whom you might not be able to buy off forever.

So instead what you do is set a comfortable minimum price industry wide and use your cartel power instead to aggressively cut costs, so that you have a credible threat of crushing any competition in a price war. This keeps potential competitors in check, thereby tacitly maintaining your preferred price floor.

When an external event does happen that actually raises supply costs, you are best equipped to eat those cost increases while your competitors struggle. Eventually, you sadly announce that you must raise your prices. This price becomes the new price floor for a while, until inflation catches up.

I'm not saying that's what they're doing, but to me that seems like a nice balance between maintaining industry dominance and not being portrayed in the media as Dr. Evil.

[ceejayoz]

The first line of the article is "Since 2020, Americans have experienced rising food prices". The pandemic's effects largely started in March 2020. "Now" is scoped to "that last couple of years", not "last week".

[AnimalMuppet]

Well, OK, didn't that cartel exist in 2018? 2010? 2000? Why now (for values of "now" that include 2020)?

The cartel explanation, by itself, still doesn't fit the timing.

[ceejayoz]

Again, the cartel(s) existed (and they've long been accused of price fixing of various kinds; BigAg price fixing fines are not new; https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy as an example). The handy "it's the pandemic's fault prices are going up everywhere" excuse to get away with big price hikes was new.

[HDThoreaun]

They didn't need excuses to raise prices, this explanation still doesn't explain why they waited. Cartel's don't care what their consumers think since they've cornered the market on an inelastic product.

[HDThoreaun]

Not really. The article doesn't have any evidence of collusion at all. 4 competitors should be more than enough to prevent abuses of market power.

[ceejayoz]

There's certainly evidence of collusion in the meat industry even pre-COVID.

https://www.atg.wa.gov/news/news-releases/ag-ferguson-s-pric...

> The Attorney General’s Office asserts Tyson Foods and 18 other chicken producers drove up the price of chicken since at least 2008, causing consumers to overpay by millions of dollars. The lawsuit asserts a widespread illegal conspiracy to inflate and manipulate prices, rig contract bids, illegally exchange information and coordinate industry supply reductions to maximize profits.

> The Attorney General’s Office investigation found a coordinated, industry-wide effort to cut production through the exchange of competitively sensitive information, signals during investor calls and direct coordination between players in the industry.

[HDThoreaun]

$10.5 million over 14 years? That's what, half a cent per pound? probably less

[ceejayoz]

That's the settlement amount, from one state and for one type of chicken product, and merely one example of how the providers collude.

Until people start going to jail, these sorts of fines/settlements are just part of the cost of doing business. The profits from the scheme tend to outweigh the punishments, especially factoring in the probable times they don't get caught doing it.