Review of Industrial Organization 18: 33–43, 2001.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands.
Indirect Damages from Price Fixing: The Alabama
C. ROBERT TAYLOR
Department of Agricultural Economics, 210 Comer Hall, Auburn University, Auburn, AL 36849,
Abstract. Indirect damages to broiler and pork producers from supra-competitive pricing of syn-
thetic lysine, which is an important feed additive, are discussed in this article. Indirect damages
occur in fundamentally different ways in the two industries because the broiler industry is vertically
integrated while the pork industry was dominated by independent producers during the 1992–1995
time period. Pass-through of higher lysine prices to hog feed purchasers is demonstrated with regres-
sion analysis of purchases of a feed premix containing synthetic lysine and a regression analysis of
purchases of synthetic lysine from feed dealers.
Key words: Cost pass-through, indirect damages, lysine, price ﬁxing.
Indirect damages resulting from supra-competitive synthetic lysine prices is the
focus of this article. Special reference is made to ongoing litigation in Alabama that
began as a Class Action Suit ﬁled in DeKalb County, Alabama, on behalf of Jack
Ashley and others similarly situated.
Presently, the Alabama case pertains to pork
producers only, but indirect damages to poultry producers and to meat consumers
are also addressed in this article.
Brief background information on lysine and the nature of indirect damages
is presented, followed by presentation of regression analyses of feed ingredient
purchases by two pork producers. The article ends with general discussion of the
actual damages versus awarded damages in Federal and state cases pertaining to
Case No. CV 95-336, ﬁled in the Circuit Court of DeKalb County, AL, for Jack Ashley, indi-
vidually and on behalf of others similarly situated, Plaintiff, vs. Archer Daniels Midland Co. et al.,
Defendants. Legal action was taken under Alabama antitrust statue codiﬁed at Alabama Code 6-5-60
(1975), which provides that “(a) Any person, ﬁrm, or corporation injured or damaged by an unlawful
trust, combine or monopoly, or its effect, directly or indirect, may,in each instance of such injury
or damage, recover the sum of $500 and all actual damages from any person, ﬁrm, or corporation
creating, operating, aiding, or abetting such trusts, combine, or monopoly ...”.Alabamafarmersare
considered indirect purchasers for purposes of antitrust analysis.