In its first enforcement action based on the exchange of competitive information since withdrawing its information sharing guidance earlier this year, the U.S. Department of Justice’s (DOJ’s) Antitrust Division filed a complaint¹against Agri Stats, an analytics company that compiles, aggregates, and disseminates data among competing meat processors. The complaint, filed on September 28, 2023, in the District of Minnesota, alleges that Agri Stats violated Section 1 of the Sherman Act by facilitating anticompetitive information exchanges in the U.S. broiler chicken, pork, and turkey markets. The DOJ contends that Agri Stats’s distribution of competitively sensitive information (CSI) related to prices, costs, and output among competing meat processors suppressed competition, increased prices, and limited supply.

Background: Withdrawal of Information Sharing Guidance

Agri Stats comes eight months after the DOJ withdrew much of its longstanding information sharing guidance.² In February 2023, the DOJ rescinded several “outdated”³ enforcement policy statements, including guidance that information shared with a third party that is historical (more than three months old), aggregated (with five or more contributing firms), and anonymized is presumptively legal.⁴ Since the rollback of this guidance, there has been a lack of clarity as to whether any “safety zones” for information exchange remain. Although information exchanges are mentioned in the 2023 Draft Merger Guidelines,⁵ the agencies have not provided further instruction outside of the merger review context.

Summary of the Case

In its complaint, the DOJ alleges that Agri Stats facilitated anticompetitive agreements among the meat processors by sharing CSI, as the exchange allowed these processors to stabilize and raise prices and restrict supply.⁶ The key allegations include:

• The processors agreed with Agri Stats and each other to provide their current CSI in exchange for Agri Stats producing reports with their competitors’ CSI and to pay Agri Stats to manage this information exchange.
• Agri Stats recruited these processors to provide Agri Stats with current data on their live production, processes, and sales.
• Agri Stats then distributed “loosely anonymized” reports of this information to the competing processors. The reports included competitors’ data related to price, supply, and (sometimes disaggregated) facility-level and company-level information and informed processors how their products’ prices compared to the weighted average and top quartile prices of their competitors.
• The processors were able to deanonymize the reports, which contained a list of contributing facilities, and use the reports and other information provided by Agri Stats to monitor competitors’ data, forecast their plans, and increase prices and restrict the supply of meat in their respective markets.

The DOJ alleges that Agri Stats’s reports were meant to promote industry profitability—but did so at the expense of competition.

Key Insights on Information Exchange

Agri Stats provides important insight into the types of information sharing that the DOJ believes violates the antitrust laws since the rollback of their previous guidance. In particular, the complaint highlights several characteristics of the information exchange that could put companies at risk of committing an antitrust violation:

• Sensitivity: The information and data exchanged is competitively sensitive information not otherwise available to the competing firms.
• Timeliness: The information and data provided is recent—from the prior week or one-to-two months out.
• Detail: The information and data disseminated include detailed cost and production information on a facility-by-facility and company-by-company basis, i.e., not anonymized.
• Asymmetry: The information is not made available to others in the industry, e.g., other companies in the supply chain are not allowed to even purchase the data.

Takeaways

The DOJ’s action against Agri Stats shows that antitrust authorities are increasing their scrutiny of information exchanges. Companies should exercise caution when handling and/or sharing information and consult with antitrust counsel before exchanging any commercially sensitive information. Key takeaways include:

• Antitrust agencies are aggressively seeking to bring enforcement actions relating to information exchanges. Companies should enlist antitrust counsel when involved in any information exchange potentially involving competitive information.
• Companies that handle or manage competitive information collected from other entities or partners should provide regular antitrust training and update their internal antitrust policies. These companies should also encourage the same for other entities involved in the information exchange.
• Companies should engage antitrust counsel early to ensure any information gathered from entities that compete against each other (or could potentially do so in the future) is sufficiently aggregated, anonymized, and made available broadly.

^[1] Complaint, United States v. Agri Stats, Inc., No. 23-cv-03009 (D. Minn. Sept. 28, 2023).

^[2] Wilson Sonsini Alert, “DOJ Withdraws Support for Healthcare Policy Statements and Increases Information Exchange Scrutiny” (Feb. 6, 2023), https://www.wsgr.com/en/insights/doj-withdraws-support-for-healthcare-policy-statements-and-increases-information-exchange-scrutiny.html.

^[3] Press Release, “Justice Department Withdraws Outdated Enforcement Policy Statements” (Feb. 3, 2023), https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements.

^[4] Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996), https://www.justice.gov/atr/page/file/1197731/download.

^[5] 2023 Draft Merger Guidelines (July 23, 2023), available at https://www.justice.gov/d9/2023-07/2023-draft-merger-guidelines_0.pdf.

^[6] The participating processors have market power over the sale of broiler chicken (at least 90 percent), pork (at least 80 percent), and turkey (approximately 90 percent).