Katya Schwenk
Appearances
Today, Explained
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There are only four companies that control 97% of this market. And what people say that has led to is price fixing and colluding to keep the prices of your French fries very high.
Today, Explained
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Josh Saltzman is the owner of a small sort of divey sports bar in Washington, D.C. called Ivy & Coney. Josh, you know, like many bar owners, he's getting his French fries from food distributors, which are buying them from these frozen potato companies.
Today, Explained
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And a couple of years ago, Josh gets a notice from this food distributor he works with saying, you know, these, you know, three or four big companies that are selling you your French fries. They're all raising the price of their product and they're all raising them by the same amount, by 12 cents a pound. All effective, like the same week or the same day.
Today, Explained
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And Josh was like, you know, that's really weird. He goes online, he writes a few tweets saying, you know, this looks a lot like price fixing, looks a lot like collusion.
Today, Explained
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In this moment of frustration, he's like, it's happening in this way that looks really a lot like price fixing. I'm going to go online and write some tweets about it. The tweets go viral. And then no one really talks about it for, you know, a couple of years.
Today, Explained
Tater bot
Two years later, Josh's tweets show up cited in this, like, series of private lawsuits calling out price fixing in this frozen potato industry. Huh. So, you know, but, you know, he was not the only one to have been harmed by this because all of these lawsuits are being brought with the help of, you know, these...
Today, Explained
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Antitrust lawyers buy grocery store chains, restaurants, food suppliers all around the country who are saying, like, these prices are going up, they're going up in lockstep, and it's hurting our bottom lines.
Today, Explained
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These are companies that are a little bit behind the scenes. Their names are Lamb Weston Holdings, Cavendish Farms. Probably you're unfamiliar with them if you are a layperson.
Today, Explained
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OK, yeah. You know, like they are often part of bigger agricultural conglomerates. in the case of Cavendish Farms. But, you know, these are not big brand name companies because they're not usually selling their products to consumers at the grocery store. You're not going to be going to buy your frozen French fries.
Today, Explained
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They have sort of this niche of the market where they are buying potatoes from growers and then they are preparing those, pre-preparing those potatoes and selling them mostly to big restaurant chains. Presumably this is, you know, free market. They're competing with each other.
Today, Explained
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In reality, what the lawsuits allege is that because this market is so, so consolidated, it sort of allowed these companies to sort of collude tacitly to fix prices by feeding their information into this data sharing platform that allows them to share confidential information about prices. Yes, it's actually called Potato Track, if you can believe that.
Today, Explained
Tater bot
That is right. Yeah, this is actually something of a trend in a lot of the big anti-monopoly cases that we're seeing, whether it's from meat processors to sugar, are looking at the rise of these third-party data platforms that allow... companies in the industry to sort of feed information. So things like their labor costs, their operational costs, their prices for different products.
Today, Explained
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And once that it is in this platform, the platform shares that information among the rivals. So it's a way for executives to share the kind of confidential pricing information that you need to do to fix prices without having to like gather together secretly and conspire to fix them, which is like against the law.
Today, Explained
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Yeah, so prices have gone up really significantly. They actually increased by almost 50% from July 2022 to July 2024. The company's drive initially justified by pointing to higher operational costs, the supply chain pandemic stuff, but those costs have since gone down and the prices have stayed high.
Today, Explained
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So over the last three months, starting in November of last year, we have seen a bunch of cases against these four companies.
Today, Explained
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Grocery stores, restaurants, like bars like Josh's have banded together and they have sued for damages saying, you know, these companies' price fixing has hurt our bottom lines.
Today, Explained
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Yeah, they've actually been quite, they've said very little. I had one of the companies get back to me saying, you know, we completely deny all of these claims. The rest haven't said anything. Big Potato remains silent on this issue. For now, they're not saying much.
Today, Explained
Tater bot
Right. I mean, I think that's where this speaks to this bigger problem, right? Of like, if we are living in a world with really lax anti-monopoly enforcement, we are living in a world where companies are sort of allowed to like price fix and, you know, buy up all of these markets and, you know, the agriculture supply chains remain as they are. These are the bigger systemic issues, right?
Today, Explained
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It's hard to know, hard to say if we'll be able to get cheaper French fries until they are solved. But for now, you know, Josh's bar is doing fine. They're still making it work with the French fries they have. So, you know, and I think at least the fact that people are talking about this issue has brought a little bit of hope.