Before we get to know the modern day meat oligopoly known as The Big 4, we must first journey back to the 1880s. While John Rockefeller was building the Standard Oil empire and Andrew Carnegie was solidifying his name in steel, the modern meat industry was still in its infancy – but the rise of the meatpackers and price fixing had most definitely begun.
By the early 1890s, five companies controlled 45% of the domestic cattle market – Swift & Company, Armour & Company, Cudahy Packing Company, Wilson & Company, and Morris & Company. They were known as The Meat Trust or The Big 5.
Every Tuesday, a representative from each of the five meatpackers would meet in downtown Chicago to decide how many head of cattle each of them would bring to the marketplace. By engaging in this price fixing collusion, they drove prices up for consumers by limiting supply, and underpaid farmers.
The 1890 Sherman Federal Antitrust Act should have prohibited this illegal activity, but whenever the heat was on, well-timed mergers or dissolutions would be executed, and prosecution was avoided. Some justice was served in 1918, when the Federal Trade Commission found "evidence of two generations of combined effort on the part of the American meatpackers, particularly the Armour, Swift, and Morris families, to control an ever-increasing portion of the food supply of the American people." The FTC went on to say, “the meatpackers were “skilled in concealing” their collusion and maintained “the appearance of competition.”
Congress eventually responded with what economist Neil Harl said was “the most complete oversight of any sector of the economy” at the time – with the 1921 Packers and Stockyards Act. Up to this point, The Meat Trust had established vertical integration through ownership of the railcars, cold storage facilities, and stockyards. This ground breaking act forced The Big 5 meatpacking firms to sell off their other interests. The USDA, FTC, and DOJ now had the authority to protect livestock farmers from anticompetitive practices. They mostly succeeded in keeping livestock markets fair for the next fifty years.