(Bloomberg) -- The U.S. Justice Department is investigating meatpacking companies for possible antitrust violations, according to a person familiar with the matter, as the industry comes under scrutiny over plant shutdowns that have disrupted the supply of meat.
The antitrust probe is in the early stages and began before the coronavirus outbreak spread across the U.S., said the person, who declined to be named because the investigation is confidential.
Meatpacking is highly consolidated with four companies -- Tyson Foods Inc (NYSE:TSN)., JBS SA (OTC:JBSAY), Cargill Inc. and National Beef Inc. -- controlling about 80% of the U.S. beef processing market. Their dominance has sparked longstanding concerns about their pricing power over livestock suppliers. Meat packer margins have surged in the last month amid the plant closures, as beef prices rose and cattle prices stayed low.
President Donald Trump on Wednesday said he would ask the Justice Department to investigate. His remark came after attorneys general from 11 states called for the Justice Department to investigate the industry for possible antitrust infractions and said they were ready to work with federal enforcers.
The Justice Department declined to comment. Tyson and Cargill declined to comment. JBS and National Beef didn’t immediately respond to a request for comment.
The Agriculture Department is separately investigating the rise in margins, which has stirred accusations of market manipulation from some cattle producers.
The U.S. is grappling with a meat crisis after the coronavirus pandemic sickened thousands of workers at slaughterhouses and forced plants to close. The producers have such a stranglehold on output that even a few closures create bottlenecks that ripple through the supply chain.
The disruptions have led to meat shortages and higher prices, even after Trump signed an executive order to keep plants running. With nowhere to send market-ready animals, hog farmers are set to euthanize millions of pigs, while cattle feeders are holding back animals or sending them into pastures.
The Justice Department inquiry into the meatpackers follows a criminal investigation into possible price-fixing by major chicken producers.
The New York Post reported earlier on the Justice Department investigation in a story about Wendy’s Co. looking into pricing by beef suppliers.
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