Feds Probe Tomato, Egg Industries for Possible Price-Fixing

(MoneyWatch)  If you're going to collude with your competitors to fix prices, the best time to do it is when prices in general are going up. It provides some cover.

That's what the federal government thinks may be happening in the tomato business and the egg-processing industry, the Wall Street Journal reported on Tuesday. Prosecutors are probing both to determine whether there is collusion among farmers, growers, food processors and exporters.

The investigations join other, previously reported federal probes of fertilizer makers, citrus producers and dairy processors.

The Journal notes the overall (legitimate) inflation in the food industry, and adds that "years of unrestrained consolidation among food producers may have had an impact as well, diminishing competition in many markets."

Partly at issue is the Capper-Volstead Act, passed in 1922 to help small farms compete with bigger ones, which allows some farm groups to work together without fear of being prosecuted on antitrust grounds. The egg and California tomato industries are claiming that they are covered by the act. The feds disagree.

The allegations against the tomato processors stem from charges that buyers at six major food companies took bribes from a big processor, SK Foods, to pay inflated prices. The investigation into those allegations uncovered more widespread conspiracy, according to the government.

Even with the big salmonella scare a few months ago (when tomatoes were at first wrongly blamed as the source), tomato prices have risen by 16 percent over the past year.

Meanwhile, the nation's three biggest egg processors are being probed in regard to their pricing and marketing practices in selling egg-derived products. The Journal has fewer details about that probe ?€" the feds are mum.