Four current and former chicken industry executives, including Pilgrim's Pride CEO Jayson Penn, have been indicted for price fixing.
Shares of Pilgrim's Pride plunged as much as 13% in afternoon trading. The stock, which has a market value of $4.46 billion, has fallen 44% so far in 2020. Shares of Tyson Foods, which was not named in the indictment, also fell on the news.
The other executives allegedly involved in the scheme include former Pilgrim's Pride vice president Roger Austin, Claxton Poultry Farms President Mikell Fries and Scott Brady, a former Pilgrim's Pride executive who joined Claxton in 2012. Pilgrim's Pride supplies chicken for Costco and Yum Brands' KFC, while Claxton is a supplier for Chick-fil-A.
A grand jury in the U.S. District Court in Denver, Colorado indicted all four with one count of conspiring to fix prices for broiler chickens from at least 2012 through 2017.
The indictment, unsealed on Tuesday, says that the Pilgrim's Pride and Claxton executives communicated to each other non-public information about negotiations with fast-food chains and grocery stores and put forth similar bids.
The Department of Justice said in a statement that the criminal investigation into price fixing is still ongoing, and the four men are the first to be charged. The offense carries a maximum penalty of 10 years in prison and $1 million fine, but the fine can be higher if the amount lost by victims or gained by the defendants was more than $1 million.
Pilgrim's Pride did not immediately respond to a request for comment from CNBC. Claxton declined to comment.