Arizona's largest egg producer agrees to pay fine in price-fixing case

The federal court lawsuit says Hickman's Egg Ranch exchanged information with others through a system that allowed them to coordinate egg prices and drive them up through "manipulation.''

The U.S. Department of Justice says the cost of eggs would be much higher now except for the fact that Hickman's and others dropped their prices after they learned of the investigation and were instructed to preserve documents.

MTQ USA, an international company, acquired Hickman's, which had been a family-owned operation, last year. A representative of MTQ USA said everything in the federal complaint occurred before that acquisition. 

"This settlement fully resolves the allegations against Hickman's Egg Ranch related to that period,'' said Nikki Richardson. "We are committed to complying with all applicable laws and regulations and to conducting business with the highest standards of integrity.''

The price fixing was enabled, according to the federal court complaint, because egg producers share information through Urner Barry Publications, a firm that reports market pricing for eggs. Hickman's and the other companies have contracts with retailers that set prices based on the Urner Barry price quotes.

Federal prosecutors said Hickman's and others coordinated as far back as 2022 to "hold'' prices, "meaning that they worked together to stop prices from declining.'' An executive from Cal-Maine Foods Inc., the nation's largest egg producer and another defendant in the case, texted Glenn Hickman, who was Hickman's CEO, stating, "we are bidding up. Let's hold it today.''

There also were regularly scheduled calls among Hickman's and other companies where they discussed Urner Barry's price quotations.

There was another instance where federal prosecutors said the companies submitted dozens of bids to Urner Barry, resulting in that operation increasing its price data for white, large, shell eggs across all regions of the country. That resulted in Hickman's and the others submitting data showing there were higher bid prices, resulting in Urner Barry, relying on that information, reporting that egg prices were "hitting records.''

Terms of the proposed settlement

Under the terms of the proposed settlement signed by an attorney for Hickman's, the company is agreeing not to communicate, discuss or negotiate, whether directly or indirectly, with any competitors about the prices or bids it is or will make and the timing of those bids. The company has also agreed to produce twice-a-year reports for the next five years, certifying that it has not made any improper communications.

There's also the agreement to provide 3.25 million eggs within the next 18 months to food banks or related nonprofit organizations in states where Hickman's currently does business. The deal makes it clear these can't just be eggs the company cannot sell.

"Eggs provided in the egg donation must be unspoiled, non-expired, and non-damaged medium or large white Grade A eggs, with at least 20-day shelf life,'' the agreement says. It also says the eggs "must be at least of a quality identical to that of eggs sold by Hickman's to its grocery store or food service customers.''

Those deliveries are required to be at Hickman's expense, with the company forbidden to charge any fee for shipping, freight, handling or service fees for any costs involved.

The deal also says eggs that Hickman's had previously donated or promised to food banks will not count toward the total "and Hickman's will make any such previously planned donations as planned.''

Overall, all the defendants will donate 53 million eggs, including 30 million from Cal-Maine and 20 million from Versova Holdings.

The $1 million payment from Hickman's — part of $3.3 million from all of the affected egg producers — will be divided among the 17 states that joined with the federal government in filing suit. The states will decide how to divide up the money.

Hickman's, founded in 1944, was sold last year to MTQ USA in the wake of the avian flu, which resulted in the company having to destroy 6 million laying hens at two farms west of Phoenix and lay off hundreds of workers.

'Illegal price-fixing by major egg producers'

Arizona Attorney General Kris Mayes, who joined in the federal and multi-state lawsuit, said residents have already been beset by higher prices for household supplies because of inflation and tariffs that were eventually declared illegal.

"But now we know that some price increases, like those affecting eggs, were the result of illegal price-fixing by major egg producers,'' Mayes said in a written statement. "This settlement holds these companies accountable, ends their illegal conduct, and helps Arizonans who need it most.''

The Department of Justice, in its own statement, said the deal will prevent the companies from engaging in "coordinated manipulation'' in the future.

"No product more quintessentially represents affordability than the price Americans pay for eggs,'' said Associate Attorney General Stanley Woodward. "These actions prove this department's continued commitment to protecting competition and providing real relief for everyday Americans' pocketbooks.''

The agreement with Hickman's and others is not a done deal.

While the attorneys for the companies have agreed, by law, it is only a proposed settlement and subject to written public comments for 60 days. After that, a federal judge in Iowa, where the case was filed, can enter a final judgment.