November 23, 2007

Uruguay accuses two Brazilian companies of alleged beef price fixation

The government of Uruguay is urged to keep a "close watch" on two Brazilian companies for its alleged formation of live cattle price fixing cartel.

Marfrig and Bertin, who own meat processing plants in Uruguay is also accused of having collusion with Brazil. Six other companies are also included in the complaints.

In a report submitted by a private consulting firm who refused to be named, there are a number of conditions in the country that encourage price fixation and collusion in the beef industry, including company consolidation, many small producers with no selling power, large entry barriers and the presence of large Brazilian companies with varied export markets. However, price fixation has not been proven.

The report outlines that for a company that slaughters 200,000 head a year, a decrease of one cent per kilogramme (live weight) in live cattle prices is equivalent to additional net earnings of US$900,000, a 25 percent profit increase.