Reposted from: https://www.wsj.com/business/egg-prices-justice-department-probe-22d6a4f6
The Justice Department has opened an investigation into the cause of soaring egg prices, including whether large producers have conspired to raise prices or hold back supply, according to people familiar with the matter.
The probe comes after prices have doubled over the past year and eggs are sometimes entirely absent from grocery store shelves. Grocers say eggs are one of the leading drivers of food inflation over the past few months. President Trump vowed to bring down inflation once he entered office for his second term.
The investigation is in its early stages. The department sent a letter to some egg companies that instructed them to preserve documents about their pricing conversations with customers and competitors, as well as communications with Urner Barry—which is now called Expana and tracks wholesale egg-price information, some of the people familiar with the matter said. The letter also signaled the department was interested in company communications about egg production and bird flu.
It couldn’t be learned whether the probe is under the direction of civil or criminal authorities.
A Justice Department spokeswoman declined to comment. The United Egg Producers, a trade group for the industry, said egg farmers are “doing everything they can to fight back against this deadly bird flu outbreak.”
The egg industry, grocers and analysts have attributed high egg prices to the worst outbreak of avian flu in American history. It has resulted in the death of more than 150 million U.S. chickens, turkeys and egg-laying hens since 2022, according to the Agriculture Department.
Egg producers have had trouble repopulating their flocks because even young birds, known as pullets, have been killed by the flu, said Emily Metz, chief executive of the American Egg Board, an industry-funded marketing organization. That has extended the recovery time from an outbreak from six months to as much as a year, she said.
“Farmers know people are frustrated and they are frustrated too by the situation,” Metz said. “They know they are not able to put on the volume of eggs that people want.”
Steady demand despite rising costs and an influx of bird flu cases among egg-laying hens over the past few months has stressed the egg supply chain, leading to shortages and a run-up on wholesale egg prices.
On average shoppers are paying about $5 a dozen, according to the Labor Department. Grocers and food distributors are paying about $8 a dozen at wholesale, which makes selling them often a money-loser.
The Agriculture Department said last month it plans to invest as much as $1 billion to address egg costs, including $500 million for expanded biosecurity measures at egg-producing farms.
Cal-Maine Foods, the largest U.S. egg producer and one of the few publicly traded egg companies, has reported rising profits from the rise in egg prices and saw its stock surge in the years since the bird flu outbreak. The shares have gained about 50% over the past 12 months.
Antitrust authorities often open investigations when high prices appear to stem from unusual disruptions to supply chains, said Lisa Phelan, an antitrust partner at Morrison Foerster. “There can be anticompetitive efforts to deal with the crisis and that is not OK either,” she said.
The egg industry has been criticized by some interest groups, such as farmer advocacy organization Farm Action, which has petitioned lawmakers and law enforcement to investigate egg pricing. In a February letter to the Federal Trade Commission, the group alleged that companies were being slow to rebuild their egg-laying hen flocks in order to restrict supply and sustain inflated prices.
Some egg producers say it takes time to rebuild their flocks and they want to avoid a repeat infection at a facility.
The Capitol Forum, an antitrust trade publication, earlier reported the Justice Department probe.
Egg producers were losers in one recent lawsuit that alleged they restricted the supply of eggs through a trade association program. A federal jury in Chicago found in late 2023 that Cal-Maine, Rose Acre Farms, United Egg Producers and U.S. Egg Marketers were liable for restricting supply between 2004 and 2008 through measures such as early slaughter and henhouse density restrictions.
The presiding judge awarded damages totaling $53 million to the four big food companies, including Kraft and Kellogg, that filed the lawsuit. The defendants have challenged the verdict and asked the judge to reverse the jury’s decision or order a new trial.
