DOJ Cracks Down on Third Party Information Benchmarking

Key Points

• This is the first major challenge brought against third party benchmarking service providers since the DOJ withdrew three “safe harbors” for such activity earlier this year.¹ Expect to see this as a continued area of focus for the US antitrust enforcers.
• The DOJ is not taking cues from past investigations or private litigation and will go after conduct even in the face of prior losses. Agri Stats has been investigated before for similar allegations and was also found innocent of the same allegations by a district court earlier this summer in private litigation.² Past legal victories will not act as shields or credibility.

DOJ Eliminates Safe Harbors for Information Exchanges

The DOJ’s Agri Stats suit comes months after the DOJ withdrew its long-standing policies regarding safe harbors for information sharing in the healthcare industry back in February 2023. This withdrawal signaled a shifting view on information sharing through third parties. Combined with last week’s claims against Agri Stats, the agency has sent a strong message that information sharing, across any industry, may be subject to greater scrutiny. This was reinforced by Assistant Attorney General Jonathan Kanter who noted in an accompanying press release to the DOJ’s Agri Stats suit that “[t]he Justice Department is committed to addressing anticompetitive information exchanges that result in consumers paying more . . . .”³

The DOJ’s Lawsuit

The DOJ alleges that Agri Stats acted as the “accountant” of the industry by collecting competitively sensitive information from protein processors and organizing it into detailed reports. Agri Stats would then allegedly send these reports back out to its subscribers (who are the very same protein processors.)⁴ These “loosely anonymized” reports included information such as sales prices, worker and farmer compensation, facility output, supplier information, and service provider information.⁵ Subscribers to the report were then allegedly able to restrict supplies and align prices to boost profits across the industry, ultimately raising costs for consumers.

The DOJ claims that Agri Stats knew these reports were being used to coordinate pricing and even encouraged subscribers to do so via its consulting services. According to the DOJ, Agri Stats also withholds its reports from purchasers, workers and farmers to create an information imbalance that further exacerbates the anticompetitive harm at play. The DOJ alleges this “asymmetry contributes to [protein] processors’ ability to ratchet prices upward. Each processor can identify which of its products are priced below its competitors’ and raise prices on those products . . . purchasers cannot use the same information to identify when they are paying comparatively high prices.”⁶

The DOJ is seeking a permanent injunction that would prevent Agri Stats from continuing to engage in these alleged anticompetitive activities in the future.

An Undeterred DOJ

The DOJ is not afraid to go after conduct, even in the face of agency losses. The DOJ reputedly investigated similar claims around a decade ago but closed the investigation after finding no evidence of wrongdoing.⁷ Even a determination by a U.S. district court earlier this summer that cleared Agri Stats of similar wrongdoing in an alleged price-fixing scheme was not enough to discourage the DOJ.⁸

Implications for Company Benchmarking

The DOJ case follows recent changes to agency guidance and enforcement actions involving information sharing. Companies involved in benchmarking, even with third-party benchmarking services, may want to review their participation in light of this increased enforcement focus. 

The DOJ’s civil suit is also a reminder to review how industry information sharing fits within a company's compliance program. In the present case, the DOJ’s complaint alleges that the defendant has no antitrust compliance program or training in place.⁹ When in doubt, antitrust counsel can provide guidance and address questions or concerns that arise in connection with benchmarking and other industry information exchanges.

Footnotes

1 Press Release, Dep’t of Justice, Justice Department Withdraws Outdated Enforcement Policy Statements (Feb. 3, 2023), https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements.
2 In re Broiler Chicken Antitrust Litigation, Case No. 1:16-cv-08637 (N.D. Ill. June 30, 2023).
3 Press Release, Dep’t of Justice, Justice Department Sues Agri Stats for Operating Extensive Information Exchanges Among Meat Processors (Sept. 28, 2023), https://www.justice.gov/opa/pr/justice-department-sues-agri-stats-operating-extensive-information-exchanges-among-meat.
4 Complaint at ¶ 3, U.S. v. Agri Stats Inc., Case No. 0:23-cv-03009 (D. Minn. Sept. 28, 2023).
5 Complaint at ¶¶ 3, 110-12, U.S. v. Agri Stats Inc., Case No. 0:23-cv-03009 (D. Minn. Sept. 28, 2023).
6 Complaint at ¶ 68, U.S. v. Agri Stats Inc., Case No. 0:23-cv-03009 (D. Minn. Sept. 28, 2023).
7 Patrick Thomas, Chicken, Pork Prices Made Higher by Meatpackers’ Data Feed, DOJ Says, Wall St. J. (Sept. 28, 2023), https://www.wsj.com/business/retail/justice-department-sues-provider-of-chicken-and-pork-data-6945b8ff.
]In re Broiler Chicken Antitrust Litigation, Case No. 1:16-cv-08637 (N.D. Ill. June 30, 2023).
9 Complaint at ¶ 102, U.S. v. Agri Stats Inc., Case No. 0:23-cv-03009 (D. Minn. Sept. 28, 2023).