Major Canadian companies allegedly involved in vast ‘potato cartel’

A “potato cartel” made of four of the largest potato product companies in the U.S. has allegedly conspired to raise prices on a variety of items like tater tots and fries.

Two proposed class-action lawsuits filed in U.S. District Court last week revealed the allegations, claiming that Cavendish Farms, McCain Foods, J.R. Simplot, and Lamb Weston secretly coordinated to raise and fix prices on frozen potato products like tater tots and fries.

The companies dominate the frozen potato products market in the U.S., controlling 97 per cent of the industry.

McCain Foods and Cavendish Farms are Canadian companies.

“Armed with the same access to each other’s data on pricing and other sensitive information, as well as with a direct line of communication to each other, the potato cartel moves prices skyward in lockstep — harming all purchasers of potatoes in the process,” reads one of the lawsuits, filed on Sunday in the U.S. District Court for the Northern District of Illinois.

The second lawsuit notes that the defendants conspired to fix prices of their products “above competitive levels.”

It added that the price of frozen potato products jumped 47 per cent from July 2022 to July 2024.

Moreover, court documents allege that these companies were able to secure lockstep price increases and inflate prices because the frozen potato industry is “structurally susceptible to collusion.”

Both cases are pursuing monetary relief for the plaintiffs and class members.

The lawsuits ring similar to the Loblaw bread price-fixing scandal in Canada.

In 2015, the Canadian grocery giant said it discovered an industry-wide bread-fixing arrangement, meaning consumers likely spent more on bread than they should have between 2001 and 2015.

Other major grocery stores, such as Metro, Sobey’s, and Walmart, were implicated in the scandal. The Competition Bureau said the companies “committed indictable offences under the Competition Act.”

In June 2024, Loblaw Companies Limited and its parent company, George Weston Limited, agreed to settle nationwide class-action lawsuits filed against them.

George Weston has agreed to pay $247.5 million in cash, and Loblaw will pay $252.5 million — $156.5 million in cash and credit for $96 million previously paid to customers by the grocery giant under the Loblaw Card program. This amounts to a total settlement of $500 million.

The settlement payment will be distributed to eligible class members under a court-approved distribution plan.

We have reached out to Cavendish Farms and McCain Foods for further comment.

With files from Isabelle Docto