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Grocers claim potato cartel fixes prices

A nationwide potato cartel - the "OPEC of potatoes" - fixes prices and production to line its own pockets, a grocers association claims in a federal antitrust complaint.

Associated Wholesale Grocers sued the United Potato Growers of America (UPGA), the United Potato Growers of Idaho (UPGI) and 20 other entities.

The defendants own more than 80 percent of the potato acreage in the United States, and used OPEC as a model, according to the complaint.

"Defendants analogised their potato cartel to the Organisation of Petroleum Exporting Countries ('OPEC') - the notorious petroleum supply-reduction and price-fixing cartel composed of various foreign nations. Defendants suggested that they should 'study' the OPEC model and their organisation was referred to as the 'OPEC of Potatoes,'" the complaint states.

The grocers claim: "Defendants, who include the largest potato growers and shippers in the United States, conspired to use pre-harvest and post-harvest methods to control and reduce the supply of potatoes in order to raise and stabilise the prices at which potatoes were sold in the United States.

"In order to facilitate the conspiracy, the defendants first came together in 2004 to form regional and nationwide 'cooperatives' - not for the purpose of marketing and selling their potato products collectively, as is the function of a traditional cooperative - but rather for the purpose of creating a national vehicle for potato growers and their co-conspirators to reduce potato output and fix prices."

A November 2004 meeting of potato growers from across the Western United States "announced the group's price-fixing plans to several hundred potato farmers, which prompted a standing ovation," the complaint states. "Many farmers signed on to the supply reduction agreement on the spot, agreeing to pay annual dues ranging from about $10,000 to $50,000 depending on how much acreage each farmer utilised for growing potatoes."

To read the full article click here.

Publication date: 4/23/2013


 


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