Opinion ID: 448913
Heading Depth: 2
Heading Rank: 3

Heading: Bagley's Testimony.

Text: 27 Only Bagley testified before the Subcommittee at the July 1979 hearings. In his opening statement, Bagley told the Subcommittee that while he worked at IBP, he found reason to question some of IBP's marketing practices. Bagley further explained that when he examined the Aarsen Documents in 1976, he could see that somebody somehow had to stand up and be counted, or IBP was going to swallow up all of its smaller competition. He therefore agreed to meet with Krieger and the others: I felt that [the lawyers] might be a starting point of my becoming involved in at least trying to prevent a massive takeover by IBP of the packing industry. In closing, Bagley stated: 28 I feel sincerely that IBP has been responsible for some great innovations in the meat industry which have been for the common good of all segments of our business; however, I also believe that the company has in the past become overly zealous in its attempts to control and monopolize the packing industry. 29 In response to questions by Congressman Smith and others, Bagley identified three particular instances of potentially overly zealous behavior by IBP. First, Bagley explained that when he joined the Company in 1971, IBP understated its yield (the amount of salable meat it obtained from a beef carcass) in its pricing formula, and by this understatement artificially inflated the price of its boxed beef. To remedy this overpricing without attracting attention from its customers, IBP began to increase gradually its stated yield. Despite this gradual rise, the yield, according to Bagley, still presented a problem for IBP when he left in 1975. Second, Bagley told the Subcommittee that until the fall of 1974, IBP offered its Cattle-Pak 12 at special prices to Waldbaum, a New York supermarket chain, and, in addition, did not hold Waldbaum accountable for periodic increases in service fees. Finally, Bagley claimed that IBP instituted a quantity discount program for certain Cattle-Pak customers in late 1971 and continued the program at least through June of 1975, despite serious reservations about its ability to justify the discount on the basis of its costs. By these assertions, Bagley apparently implied that IBP favored certain customers in its pricing policies. 30