The Egg Bandits Made a Thousand Times the Fine They Just Paid for Price Fixing
thebignewsletter.com429 points by toomuchtodo 11 hours ago
429 points by toomuchtodo 11 hours ago
I've known about Cal-Maine's scammy practices for years. It's difficult to know which brands are associated with a group like Cal-Maine, but I did my best at one point to get a list which I still check before buying eggs.
The brands I've been avoiding are:
4Grain Cage Free
Egglands Best
Farmhouse Eggs
Land O'Lakes
Fassio Egg Farms
Southwest Specialty Eggs LLC
Rocky Mountain Eggs
Meadowcreek Foods
Specialty Eggs LLC
Red River Valley Egg Farm
ProEgg Inc.
Dixie Egg Co.
American Egg Products LLC
Texas Egg Products LLC
Wharton County foods
Benton County Foods
Sunups
Sunny Meadow
Mahard Egg Farm
Maine Egg Farms
Versova is new to me, but I'll try to avoid them too. It looks like their brands include:
Center Fresh Group
Centrum Valley Farms
Iowa Cage FRee
Hawkeye pride
Ovation Farms
Trillium Farms
Willamette Egg FarmsCornucopia Egg Scorecard focuses on ethical treatment of hens but is sometimes a bit more expansive than that too. A convenient list of good eggs
https://www.cornucopia.org/scorecard/eggs/
All the brands you listed that I could find on their list seem to have the lowest scores.
I’ll stick with Kirkland Signature which is supplied by Wilcox. I don’t really think Costco ever raised their egg prices afaik.
Pete & Gerry's seem to be legit from the research I've done. At least, I hope so!
I did not realize the egg crisis was found to be price fixing operation.
As I recall during the whole thing the news was non-stop about how it was related to broad-based inflation, chicken culling for avian flu, etc. Seems like all that was a lie, or at least merely a half-truth.
Never let a good crisis go to waste, or so the saying goes.
The consolidation of food production in the US is a risk to us all.
The avian flu pandemic started in early 2022. I looked up old news articles and a lot of them are dated February 2022. It really did increase egg prices.
The collusion quotes in this article start in October 2022, though it doesn't say exactly when the collusion started.
As far as I can tell, avian flu did create a supply shock, which did raise prices. When the avian flu problem started going away, the egg companies started colluding to try to keep the egg prices high.
According to one lawsuit, Cal-Maine wasn't impacted at all by the avian flu, they just jacked prices up 270% anyway while using the avian flu as an excuse.
> Meanwhile, in context and during the class period, egg producers like Cal-Maine increased egg prices by as much as 270% in 2023 despite having zero Avian Flu outbreaks in their egg laying hen layers on Cal-Maine affiliated farms (https://www.classaction.org/news/antitrust-lawsuit-says-prod...)
“As an excuse” is a weird way of saying “responding to national supply and demand”. 100% of the suppliers who didn’t have to cull all of their chickens raised their prices.
On its face, this is a normal market response: if demand is unchanged and overall supply goes down, prices go up.
The criminal conspiracy part here was manipulating the index prices in tandem so that everybody raised prices in lockstep.
> if demand is unchanged and overall supply goes down, prices go up.
How much did supply go down considering that Cal-Maine Foods, Inc is (or at least was) the single largest supplier of eggs in the country? Ultimately their profits increased 718% (https://www.cnn.com/2023/03/29/business/egg-profits-cal-main...) which seems unlikely to be explained away by reduced supply. They were price gouging and fixing prices with the other large suppliers to prevent consumers from just switching to those brands while small egg producers may have had issues with avian flu keeping their fairly priced products off the shelves.
I'm agreeing with you here? All I'm saying is that one company raising prices and raking in profits by itself is not a crime. The key parts here are conspiring with other producers to make sure everybody does the same, and manipulating the index to make it look legit.
Back then I had done the math on how long it takes to turn around a commercial chicken coop after a complete full. The timeline from egg to fully producing hen was quicker than I thought, and it seemed they should have been able to keep up the replacement rates.
Those contributed.
But also, the news isn’t privy to an actual price fixing conspiracy while it’s happening. To the extent that a news org reports on it, it’s because someone within the system grows some ethics (very hard to burn a bridge when it means no more revenue in the industry). It took even the regulators years to build a case for it.
People have long complained about the consolidation of the chicken production chain in the US. Only 2-3 major companies control most of the supply via contracts. The farms are required to follow the terms of the contract closely when raising chickens or risk getting locked out of the major distributors. Post-consolidation, the industry is ripe for abuse.
The combination of very strong contract enforcement and weak regulatory enforcement means the industry is effectively rent-seeking by design. This much was known, but without subpoena power, actual price fixing is just a suspicion.
The US economy is jampacked with collusion price fixing. Most markets are controlled by monopolies or oligopolies.
I call it 3 scams in a trench coat pretending to be a real economy. Though obviously there are more than 3 going. You kinda have to be in one of the grifts in order to pay the costs of the others, like work in military contracting in order to pay for healthcare. That’s why crackdowns on fraud, collusion, and other such grifts, rackets, and anticompetitive actions in the US is doomed to fail, those who benefit from it tend to be the most reliable political donors. It’s hard to go after one and not go after the others and that would upset a lot of politically powerful people, this results in an armistice and not going after any.
of course it helps that all of these politically powerful and reliable donors are also epstein class untouchables.
It was 100% due to Biden.
(Or so I was told. Might even be the reason we have Trump 2.0?)
Yeah, he's definitely the cause of all our past and current problems.
The major egg supplier for most of the grocery stores decided not to buy as many pullets to replace the ones they culled from Avian Flu, and then the second and third largest also followed suit. As a result there was a bug supply crunch that coincided with Avian Flu cullings. Unless Biden was there making command decisions about how many pullets to buy that year he had nothing to do with it.
Not disagreeing, but all I heard was Biden-flation (or whatever they called it) was why we needed a new President.
It could have been investigated. Even this article states prices went down as a likely result of the investigation. Turning a blind eye bears some culpability. All we heard during those years was that it was due to avian flu shortage, and if you mentioned otherwise, you got shouted down by politically connected people.
> It could have been investigated.
The investigation started during Biden’s term as president.
Not sure where you’re getting this information, it began early 2025:
https://www.politico.com/news/2025/03/07/doj-investigation-e...
If all you needed was a new president you could have chosen the other option.
>all I heard was Biden-flation (or whatever they called it) was why we needed a new President.
From whom did you only hear that? Newsmax? The Drudge Report?
Apparently vox populi. A majority of the U.S. must frequent those sites.
(I'm beginning to think some people missed the sarcasm in my earlier posts.)
Perhaps people were lying to you in order to make you want that new president...
> all I heard was Biden-flation
Listen to different sources then. It's weird to complain that when you listened to overt pathological liars, all you heard were lies.
Ha ha, I'm just voicing what the right-wing pundits were (apparently successfully) pushing.
(I've recognized them as liars since Day 1, but I only get my one vote. Apparently my sarcasm in previous comments was unrecognizable.)
Wow, well I have egg on my face. I have frequently used this as an example of the "oh so the egg guys got greedy and then got saintly" to parody the idea that price is primarily determined by greed. Welp! Now to see if I can eke out some pride by finding out what percentage of the price fluctuations was due to coordination.
> During the 2024 campaign, when Kamala Harris meekly suggested price gouging to tame inflation,...
Haha, she suggested going after price gouging. Though the idea of someone meekly suggesting price gouging is funny.
The infamous greed cycle: https://streamsofconsciousness.blog/wp-content/uploads/2023/...
An important idea I’ve observed true across industries is “prices rise like a rocket and fall like a feather,” meaning that even though price rises are usually genuinely driven, you can bet that once they’re up the involved parties are doing whatever they can to keep them up. Humans are greedy.
More formal reading: https://en.wikipedia.org/wiki/Asymmetric_price_transmission
A thing can have many causes. One is the direct cause: the city exploded because someone pressed the button to launch the nukes and left the coordinates set to zero. Even more direct: the city exploded because a critical mass of uranium was assembled. There can be many indirect causes: someone put an idiot in charge of the nuke-launch button, someone forgot to put a molly-guard on the nuke-launch button, someone invented nukes.
Price is usually determined by producer greed because producer greed causes prices to consistently be set as high as possible. This is usually constrained by market competition, which limits how high they can be set. In rare cases, prices are set low by consumer greed.
A high price has a direct cause: the person in charge of setting prices set a high price. A little less direct: that person is incentivized to set prices as high as they can. Much less direct: there are currently few competitors due to avian flu; we have one of very few chip fabs that can make the widgets; our customers are locked in; our customers signed contracts allowing us to raise prices but forbidding them from cancelling when we do. Greed is always one of the more direct causes of high prices. The fact that capitalist markets use greed as an integral part of their normal functioning does not change this fact.
Things like this mainly occur in markets with little competition, killing of small business causes issues like this. Much of our grievances are caused by our high level of market concentration.
This was addressed by Matt Levine in today's Money Stuff. The problem was not the presence or lack of competition, it was a technical failure of the market structure. Matt:
This is a familiar story and you probably know the ending. There’s a big market (egg producers selling eggs to supermarkets etc.), and there’s a small market (egg producers selling extra eggs to each other on an electronic exchange). The price in the small market determines the price in the big market. Participants in the small market are also participants in the big market. You can spend a little money in the small market to move the price, which can make you a lot of money in the big market.
Not defending the bad actors here, but there's that whole "show me the incentives and I will predict the outcome" thing. If the market structure rewards manipulation, you get manipulation. The market structure doesn't have to be this way.
What’s weird is the big market is pegged to the small market?
What is the point of signing a direct supply contract if you are just gonna be paying spot prices anyways? I suppose guaranteed supply priority?
If there is (or you think there is) a generally fair and stable price that represents some base, then it’s natural to contract based on that.
It’s near universal for variable interest rate loans.
> "show me the incentives and I will predict the outcome" thing
There are supposed to be two stopgaps here.
First, the fear of going to jail for committing crimes. Secondly, the social reprisal for committing crimes that hurt people.
Like seriously these CEOs shouldn't be welcome at anyone's table or gathering in polite society as a result of their actions, bare minimum. The government should also put them in prison.
Companies bribe government and install their employees in regulatory agencies to avoid the prison sentences and other legal trouble, but I seriously wonder how any of these people are able to show their face in public without having an angry mob form.
Hiding behind a faceless corporation certainly helps with that somewhat, but in this case one of the egg companies involved isn't shy about telling us exactly who they are (https://hickmanseggs.com/about/). When there's no longer a working legal outlet for justice how long before people start leveraging the technology they have to identify the people who are hurting them and make their feelings known. We need a functioning legal system and accountability to keep things from getting out of hand, so it concerns me that corruption has been allowed to flourish and go unpunished.
While Matt is technically correct, it's much easier to maintain a conspiracy like this when you have a small number of participants with a high concentration of share.
If power is more diluted among a greater number of participants you are way more likely to see defectors, which would provide accurate pricing data to the market and cause the conspiracy to fail.
Can that be reduced to Prisoners Dilemma game theory?
Yes. Specifically in this case, "defect" is the good case and cooperate is price fixing cartel. So with more prisoners, the chances of someone choosing defect goes up. So then everyone else choose defect, breaking up the price fixing cartel, leading to market forces working and lower prices for consumers.
And notably, we used to have a somewhat progressive corporate income tax which, at least on paper, provided a quantitative disincentive against too much consolidation. Sometimes the merger of A and B would pay a higher rate than A and B separately. And we gave that mechanism up.
I'm not typically a fan of government intervention in markets but Canada's marketing boards do stop this sort of concentration, so while we have higher average prices we do not get massive swings in prices, nor the physical conditions that come directly out of production consolidation that lead to events (or justifications) like avian flu at the same scale.
It's exactly the opposite as you say though, no? Canada has much more market concentration than the US, probably a major cause of the higher prices: https://alphabridge.co/economy/canadas-oligopoly-one-big-cou...
OP is talking about Canada's supply management system in place in some areas (including eggs). Supply management is a government system that basically puts all large scale production of these items under both a quota system (farmers need to get/buy a license/quota), and fixed pricing to the farmer.
It is a form of farming subsidy that was specifically structured to avoid passing money through the government, and structured to control price volatility.
This is separate from the commercial market concentration in Canada, which is definitely real. To a degree, this is just the reality of being a smaller market. The depth and breathe of the American economy is definitely at play here.
If you compare Canadian super market consolidation vs Germany or UK (for example), you find a much more similar situation.
We were stuck in the Gilded Age for decades before Roosevelt came along and started big trust-busting efforts. I expect a similar situation to play out here. We're probably in the middle of it in retrospect.
Maybe - or is this closer to the naked theft we saw out of the collapse of the Soviet Union? That's still playing out...
I think at the end of the day, we're still able to produce really effective technology and products. Like the economy is still functioning. I feel like this is different from the Soviet situation where the problems were more related to product quality and shortages and black markets.
Al Franken has related the difficulty he had convincing Democrats and Bernie Sanders to sign on to fighting the Comcast Time-Warner merger until they determined it was beneficial to themselves to oppose it.
Do you have a source for that? I'm curious to learn more about how hard it was to convince Sanders that the merger was a bad idea.
This podcast mentions a summarized version of the story at the beginning with an impersonation. I remember another, maybe later on in the interview portion, where he explicitly called out Sanders' reluctance.
I think perhaps the USA's modern decline right into the toilet is the result of changes made in the 80's, like gutting anti-trust. What we're seeing now is just the visible manifestation of corruption that has been allowed to grow and metastasize since then.
>the result of changes made in the 80's, like gutting anti-trust.
The '90s didn't help a lot either. cf. the repeal of Glass-Steagall[0] which, arguably, did much more to damage the US economy (there's a direct line from its repeal to the 2008 financial crisis) than a lack of anti-trust enforcement.
That said, dismantling anti-trust enforcement (which was pretty hit or miss anyway) didn't help either.
[0] https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
An assumption required to make capitalism work efficiently is that customers have meaningful choices. Trustbusting is one of the important roles of the government, if it were functional.
Do decentralized banking is better for business competition and market health.
But we live in a too big to fail, regulatory capture environment.
Most true small businesses can't exist in markets with a lot of competition. Highly competitive markets have a lot of fluctuation and businesses with little capital fold when there's a downturn.
In fact, most markets naturally go from high competition to monopoly or oligopoly. You can see this in chips, cars, airplanes, steel, ecommerce(Amazon) and beyond. Indeed, many oligopoly situations only fail to be monopolies through either antitrust activity or through nation-states supporting their competitors (chips).
Agriculture in particular tends to be geographically dispersed so it's harder to have absolute monopolies. But some "harking back" claim of "if we only had small business, all the predatory stuff wouldn't happen" really fails to understand the dynamics of markets. Scale in agricultural production is what allows the low prices you get in stores - But $10 cage-free organic eggs are available at my local coop for those who love small businesses (though I prefer the $2 cage free eggs at nearby Grocery Outlet).
False. There is no Economic Law of Consolidation such as you posit here. Haircuts are a mature market, yet plenty of small providers thrive. Counterexamples to your extraordinary claim abound.
The actual economics in highly competitive markets depend on what is known as the Minimum Efficient Scale, which in turn depends on the shape of the cost function.
Haircutting doesn't scale. It is labor intensive and there is no way to increase productivity.
QB House and its many imitators would like a word. It's a genuine mystery to me why these "fast haircut" chains are ubiquitous in Asia but unknown in the West.
https://medium.com/@justin.tan/qb-house-back-to-basics-busin...
It's so fun how corporations are protected from individual liability but also their money is treated a speech.
>It's so fun how corporations are protected from individual liability
They're not. If you hire a hitman through a corporation it doesn't magically become legal.
It does permit something individuals don’t have: the internal investigation.
The internal investigation has determined that our CEO had no knowledge of this, and that the bloody pig mask was all the idea of the people who make less money, and also we fired the CEO for unrelated reasons.
>The internal investigation has determined that our CEO had no knowledge of this, and that the bloody pig mask was all the idea of the people who make less money, and also we fired the CEO for unrelated reasons.
That's exactly how the criminal justice system should work? If you can't prove a particular person is responsible, you don't have a case. That's exactly why they prosecuted the company as a whole instead, because easier to prove the company as a whole did something, rather than a specific person.
The issue is that an internal investigation is not an impartial source.
I agree, in this hypothetical if there's no evidence the that the CEO committed a crime he/she shouldn't go to jail. But considering that "internal investigators" are likely hired (directly or indirectly) by the CEO, are likely shareholders in the company, they have little incentive to fully investigate.
The police certainly aren't perfect, but they at least have less of an incentive to lie about this.
> But considering that "internal investigators" are likely hired (directly or indirectly) by the CEO, are likely shareholders in the company, and so they have little incentive to fully investigate.
Right, but no prosecutor is like "well the CEO had an internal investigation so we're not going to investigate"
I feel like that is exactly what happens for anything but the most serious crimes. Keep in mind, a lot of internal investigations are not reported to the public and we never hear about them. Part of the reason that they're "internal" is so that they stay internal; we only hear about ones that leak.
Even for very serious crimes (e.g. sexual harassment or assault) these internal investigations end up being "sufficient", and the police don't bother.
Right, but unless internal investigations are somehow deterring investigations by prosecutors, I don't see what the issue is. Would you rather than there's no internal investigations?
I'd rather things like sexual assault get directly reported to the police instead of having people directly paid by the accused LARPing as investigators, yes.
