A “potato cartel” has allegedly conspired to artificially hike prices on french fries and hash browns as they corner the $68 billion frozen spuds market, according to multiple lawsuits.
After decades of consolidation, just four companies – Lamb Weston, Canada-based McCain Foods, the J.R. Simplot Company and Cavendish Farms – control 97% of the market, according to antitrust lawsuits filed in the US District Court for the Northern District of Illinois in November.
Between July 2022 and July 2024, these tater titans sent the price of frozen potato products soaring 47% by colluding to raise prices, according to court documents.
“When there are only a handful of players in the market, collusion is too appetizing for these companies to pass up,” Lindsay Owens, executive director of economic think tank Groundwork Collaborative, told The Washington Post.
The companies blamed the increases on the rising cost of operations, but the price of frozen potatoes remained high long after operating costs eased, the complaints claimed.
Marc Doucette, vice president of communications at Cavendish Farms, called the allegations in the lawsuits “baseless.”
“We intend to vigorously defend ourselves against them,” Doucette told The Post on Friday.
The three other companies mentioned in the lawsuits did not immediately respond to requests for comment.
Since November, restaurants and grocery stores have filed more than a dozen class action lawsuits arguing that the prices imposed by the “potato cartel” has crushed their bottom lines.
Around 40% of all potatoes grown in the country – or 17 billion pounds – are sold to frozen potato companies each year, according to the suits.
Lamb Weston and McCain control 70% of the market, while J.R. Simplot holds 20% and Cavendish Farms controls 7%, the lawsuits said.
“All of these industries are trending toward duopolies — the model of Coke and Pepsi,” Philip Howard, a professor at Michigan State University who studies concentration in food systems, told The Lever, an investigative news site.
Other sectors are not quite as bad as Big Potato’s 97% concentration, but “a lot of industries are getting closer and closer to that,” Howard said.
The four companies had been colluding to fix prices since 2021, according to the suits.
In April 2022, Josh Saltzman, the owner of a Washington, D.C. sports bar, said he received a notice from his food distributor that the four major suppliers were each hiking their prices by 12 cents per pound. In a viral post on social media, he joked: “Totally not collusion or anything, right?”
“It was just the most obvious example of collusion I’ve seen in a long time,” he told The Lever. “All of them were raising their prices by virtually the exact same amount within a week of each other.”
The lawsuits claim the four companies made near-identical price hikes several times throughout 2021 and 2022. In some cases, the rival companies made announcements within days of one another that they were raising prices, effective on the same dates, the suits said.
Court documents allege executives at the frozen potato companies made comments alluding to the price fixing scheme, though it’s unclear when and where the comments were made.
In 2023, a former McCain Foods director allegedly said they wanted to compete with Lamb Weston on pricing but were told not to by “higher ups in the room,” according to the lawsuits.
That same year, a former Lamb Weston executive said competitors were “behaving themselves” and that they had “never seen margins this high in the history of the potato industry,” the complaints alleged.
In October 2023, Lamb Weston said its net income had grown 111% since the year before, which the chief executive attributed to “pricing actions,” according to the suits.
It’s surprising that regulators allowed the frozen potato companies to gain such an overwhelming hold on the market, Howard said.
“It’s interesting that even in a very permissive environment of mergers and acquisitions, this industry was allowed to get to the level that it has,” he told The Lever.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
