Post Holdings proposes settlement to put egg antitrust class action to bed

By Gill Hyslop contact

- Last updated on GMT

Post Holdings has agreed to pay $75m to settle a class action lawsuit against its subsidiary, Miachels Foods. Pic: ©iStock/ekinyalgin
Post Holdings has agreed to pay $75m to settle a class action lawsuit against its subsidiary, Miachels Foods. Pic: ©iStock/ekinyalgin
Post Holdings has agreed to pay $75m to settle all class claims against its subsidiary Michael Foods, accused of fixing egg prices.

On October 16, 2008, purchasers of shell eggs brought a class action lawsuit against the leading US producers of processed eggs, including Michaels Foods, Rose Acre Farms, RW Sauder, Ohio Fresh Eggs, Cal-Maine Foods, United Egg Producers and United States Egg Marketers.

Filed in the Eastern District of Pennsylvania, the multidistrict litigation (MDL) alleged that, since 2002, the producers had conspired to inflate the prices of processed eggs.

egal

What’s cracking?

Processed eggs are removed from their shells and transformed into refrigerated liquid, frozen or dried form, as well as specialty products, such as wet-pack and dry-pack pre-peeled hardboiled eggs, sold whole or sliced, or pickled.

According to a report by MarketsAndMarkets, the egg processing market will be worth $29.2b by 2020, growing at a CAGR of 3.6% from 2015 to 2020.

The sector is expected to witness significant growth due to the demand for bakery, confectionery, convenience and ready-to-eat food products, which are on a constant rise.

Shell eggs are bought or sold in their natural state in the shell.

Coming to a close

The MDL predates Post Holding’s acquisition of Michael Foods, which was completed in June 2014.

However, president and CEO of Post Holdings, Rob Vitale, said the settlement was in the best interest to everyone to finally bring the long and complex litigation to a close.

The terms of the agreement are still to be formally documented and are also subject to approval by the court following notice to all the class members.

However, the consumer packaged goods holding company has reported it does not foresee any complications.

Under current law in the US, the settlement is deductible for federal income tax purposes and Post Holdings stated it expects to record a pre-tax charge in the first quarter of its fiscal year 2017.

The $75m settlement does not affect the action filed on behalf of indirect purchasers of shell eggs (who were unsuccessful in class certification), or dismissed claims by direct purchasers of egg products (which is being appealed).

The case is In re: Processed Egg Products Antitrust Litigation, case number 2:08-md-02002, in the US District Court for the Eastern District of Pennsylvania.

Michael Foods is a food processor and distributor of egg, pasta, refrigerated grocery and potato products, including All Whites and Better ’n Eggs, among others, sold mainly in the US.

The company’s net sales were $2,184.7m for the fiscal year 2016, a decline of 5.2% over the reported prior year.

Related topics: Regulation & Safety, Ingredients

Related news

Show more

Related products

show more

Maximise protein enrichment, the premium way

Maximise protein enrichment, the premium way

Roquette: Improving well-being by offering the best of nature | 18-Oct-2017 | Data Sheet

As European consumers adopt healthier lifestyles, so their eating habits include more high-protein foods. High protein cereals and bars are among the most...

FIND YOUR PERFECT HARMONY

FIND YOUR PERFECT HARMONY

Tate & Lyle | 03-Oct-2017 | Technical / White Paper

Consumers want to eat less sugar and fewer calories – but that doesn’t mean they’re willing to sacrifice great taste, texture or appearance when selecting...

Related suppliers