‘Potato cartel’ price-fixing scheme in U.S. courts linked to Ontario company

Two Canadian companies are in hot water as the U.S. court system has taken them to task for an alleged conspiracy surrounding potatoes. 

Recent lawsuits have been filed within the U.S. District Court — one on behalf of the Redner’s Markets grocery chain and the other by Alexander Govea — which have cited McCain Foods, Cavendish Farms, Lamb Weston and J.R. Simplot in an elaborate scheme to inflate the price of frozen potato goods. 

McCain and Cavendish are based in Canada, with corporate offices in Toronto, Ontario and Dieppe, New Brunswick, respectively. 

According to available court documents, these organizations maintain a stranglehold on their respective industries, controlling roughly 97 per cent of the $68-billion (per year) Frozen Potato Products market.

Common goods linked to this case include fries, tater tots and hash browns, which have been the subject of alleged price fixing for the last few years. 

“By at least the start of 2021, Defendants conspired to fix the prices of their Frozen Potato Products above competitive levels. This conspiracy has continued, unabated, to the present. Defendants have been able to increase the price of their Frozen Potato Products even after their input costs significantly declined,” read documents from the Redner’s Markets case. 

Further details surrounding the conspiracy noted that the frozen food market cultivated an environment for collusion, as corporate parties were given numerous windows for opportunity. 

“Market features [included] highly concentrated sellers, high entry barriers, fragmented buyers, repetitive purchases, inelastic demand, and opportunities to collude through common co-packing arrangements, trade association events, and mechanisms to exchange market share and likely other information enabling Defendants to implement and monitor their conspiracy,” stated documents. 

According to the Govea lawsuit, all implicated companies have access to each other’s personal information alongside a direct line of communication, which resulted in a “potato cartel move price(s) skyward.”

While much of the alleged cartel activity can be traced back to 2021, information from the Render’s Markets lawsuit cited that Frozen Potato Product prices climbed by 47 per cent from July 2022 to July 2024 alone. 

An online paper trail confirming these allegations can also be found, as court documents also cited an X (formerly Twitter) post from 2022, where a Washington D.C. pub operator stated, “Amazing how all of the major suppliers for French Fries and the like are all raising their prices at the same time and by the same amount. Totally not collusion or anything, right?”

For those on this side of the border, these ongoing price-fixing disputes in the U.S. likely echo last year’s  Canada Bread Co. lawsuit, in which the Ontario-based food manufacturer was charged $50 million for price-fixing, while Loblaw and its parent company George Weston were hit with a $500-million class-action for the same scandal. 

At the time of publication (Nov. 20) INsauga.com has reached out to both McCain and Cavendish but has yet to receive comment. 

The listed lawsuits have not been filed as class actions and the allegations have yet to be proved in court. 

However, if certified, Govea’s case would see that from Jan. 1, 2021, to today, Govea and selected Class members would seek damages through “declaratory and injunctive relief – specifically, injunctive relief ending the potato cartel’s conduct, disgorgement of profits into a constructive trust under the doctrine of unjust enrichment.” 

As for the Render’s Market case, if filed, their claim would involve individuals who purchased products from the listed corporations “from at least January 1, 2021, until the effects of their [Defendents] unlawful conduct cease(s).”

According to information by a National Potato Council report from Feb. 2024, the U.S.-based potato market alone generated over $100 billion in base revenue in 2021.