So after the surge in prices from normal market forces, they tried to keep prices up by placing high bids on eggs that they never intended to actually purchase. This briefly worked, then the market re-asserted itself and prices cratered. Now, after the fact, the justice department is investigating the bidding shenanigans. Is that a fair summary of the situation?

I guess the thing I'm confused about is how bidding above market rates for eggs didn't just result in these companies being stuck with a bunch of eggs that they grossly overpaid for? How did the scheme actually work?

It sounds like the exchange consumes bids, not just closed transactions. So these companies were basically publishing fraudulent bids that never completed.

I can’t tell from the article if they were bidding on each others eggs or bidding on other farmers eggs and then canceling.

They buy a relatively small number of eggs at a high price, but the price of the transaction is an input into an index that the larger market uses.

> This briefly worked, then the market re-asserted itself and prices cratered. Now, after the fact, the justice department is investigating

No, the price drops at the exact moment the DoJ starts looking into it.

There are a lot of market manipulation techniques that follow this type of pattern. Usually the perpetrator does some combination of

1) Putting in the out of market bid and immediately cancelling so the high bid doesn't get filled. Sometimes they might make this bid in small size so it doesn't matter too much if they do get filled (but this only works if the market is relatively thin or illiquid). Depending on the market, you might be able to put order flags or abuse the matching algorithm to make it less likely to be filled even though your order seems to cross the spread. So for example sometimes people will put in an order, cancel and then place it again so they go to the back of the queue at that level for example.

2) Stuffing the order book lower down with (larger) passive sell orders that will get hit as the market followers start bidding up in anticipation of the price move caused by the very high bid.

I'm not as familiar with the regime in the US markets but in UK/EU markets this behaviour is absolutely market abuse and can result in criminal prosecution and disgorgement of profits.

well if you keep reading, the investigation has concluded and they are declining to pursue any charges, alleging that the return of egg prices to pre-collusion levels is the desired outcome. there may be a $3 million fine, which is of course microscopic compared with the profits created from collusion. surely a years-long price fixing conspiracy costing consumers billions deserves more than that, but under this administration we are unlikely to get it.