Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Turkey producer allegedly maintained monopoly by restricting turkey growers from selling their farms, (Jul 29, 2015)

By Linda O’Brien, J.D., LL.M.

A producer of live turkeys engaged in anticompetitive conduct by restricting the ability of its contracting farmers to sell their farms at fair market value in order to restrain trade and boycott in the turkey farm market, according to a complaint filed in the federal district court in Columbia, South Carolina (Atkinson v. Prestage, July 24, 2015).

Ronald Prestage, owner of Prestage Farms of South Carolina, is in the business of producing and selling live turkeys to large food manufacturers. Prestage enters into contracts with local farmers (“growers”), who develop turkey houses on their land and use the houses to feed and care for Prestage’s turkeys until they are big enough to harvest.

The complaint states that, in August 2012, Steven Atkinson, who owned a farm in Bishopville, South Carolina, entered into a three-year contract with Prestage to become a turkey grower. Under the terms of the contract, Atkinson agreed to (1) provide suitable growout houses for the turkeys, (2) provide the labor, equipment, and water necessary for the proper growing and caring for the turkeys, and (3) permit inspections of the turkeys and houses at any time. Prestage agreed to furnish the necessary feed and medicine for the proper caring for the turkeys. Title of the poultry and all items furnished by Prestage remained Prestage’s. The contract did not contain any restrictions on a grower’s right to sell, lease, or partition their land.

In Spring 2014, Atkinson contemplated selling his farm and received an offer of $1.1 million from a local farmer. Believing the fair market value to be higher, Atkinson declined the offer and contracted with H and A Realty & Development to list, market, and sell his farm, whereby H and A would receive a commission of the completed sale. As a result of H and A’s efforts, Atkinson entered into a sales contract with a second prospective buyer for the price of $1.4 million. Atkinson notified Prestage of the sales contract, but Prestage said that he would not award a grower contract to the prospective buyer because he believed the agreed upon sales price was too high. Atkinson then renegotiated the contract to reduce the sales price to $1.1 million for the land and $300,000 for various farming equipment, the complaint alleges.

According to the complaint, H and A was contacted by a third prospective buyer, who indicated a willingness to pay $1.5 for Atkinson’s farm. Atkinson notified Prestage of the third buyer, who again responded that he would not award a grower contract to any buyer of the Atkinson farm if the total sales price was more than $1.1 million. Prestage stated that a buyer would be unable to obtain financing if the sale price was too high. Subsequently, Atkinson abandoned the potential agreement for $1.5 million and breached the sale agreement for $1.4 million. In October 2014, Atkinson entered into a contract with the first prospective buyer to sale his farm for $1.1 million. H and A did not receive a commission from the sale, since Atkinson had already procured the offer before hiring H and A.

The complaint also alleges that, through his anticompetitive use of restricting its growers from transferring their farms, Prestage maintained his monopoly power in the turkey farm market. His conduct has harmed competition by making the supply and selection of products available lower in the turkey farm market than they would be in a competitive market, and diminished the number and effectiveness of competitors, Atkinson charged. Additionally, as a result of Prestage’s actions, Atkinson suffered damages by having to sell his farm at a below-market price.

The plaintiffs assert claims for restraint of trade and monopolization in violation of Sections 1 and 2 of the Sherman Act. The action seeks treble damages, pre-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:15-2950-TLW.

Attorneys: William E. Hopkins, Jr. (Hopkins Law Firm, LLC) for Steven W. Atkinson, and H and A Realty & Development, LLC.

Companies: H and A Realty & Development, LLC; Prestage Farms of South Carolina, LLC

News: Antitrust SouthCarolinaNews