The U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit against Agri Stats, alleging that the company violates Section 1 of the Sherman Act by collecting, integrating and distributing information related to price cost and output among competing meat and poultry producers.
The DOJ asserts that this type of information sharing harms customers, including businesses who sell meat products, as well as the end consumers.
The legal complaint against Agri Stats was filed in a federal court in Minnesota.
Founded in 1985, Agri Stats provides benchmarking reports for the broiler chicken industry, as well as other protein producers. The company aggregates and analyzes data provided by the producers and publishes the data in reports that allow the producers to compare their performance against industry averages and identify areas for improvement. Subscribing producers use the reports to identify specific opportunities for cost reduction, productivity enhancement and quality improvement, helping subscribers stay competitive in their protein sectors, according to the company.
“The lawsuit threatens serious harm to American consumers of chicken, pork and turkey because protein producers depend upon Agri Stats’ reports to help them identify opportunities to reduce production costs to keep prices low,” the company said in a statement.
“DOJ’s lawsuit alleges – contrary to the law and the facts – that Agri Stats reports results in higher prices and lower protein production. Since it’s inception in 1985, Agri Stats has played a vital role in the United States economy, helping to drive increased efficiency, improved innovation and ultimately provide more chicken, pork and turkey to consumers for less money. Protein production has expanded dramatically, all while prices have plummeted. Just for example, the inflation adjusted price for boneless chicken breast is a third of what it was when Agri Stats started providing benchmarking services to chicken producers, all while production output has tripled. DOJ’s lawsuit turns the antitrust laws on their head and seeks to punish Agri Stats for fostering these consumer beliefs.”
But the DOJ sees it differently.
It alleges that Agri Stats understands that meat processors have used these reports for anticompetitive purposes and, in some instances, even encouraged meat processors to raise prices and reduce supply. It also asserts that Agri Stats distributes sensitive information among participating processors, Agri Stats withholds its reports from meat purchasers, workers and American consumers, resulting in an information asymmetry that further exacerbates the competitive harm of Agri Stats’ information exchanges.
“The Justice Department is committed to addressing anticompetitive information exchanges that result in consumers paying more for chicken, pork and turkey,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “This case is the latest effort by the Justice Department to protect American consumers, farmers and workers from anticompetitive practices in the agriculture industry.”
According to the DOJ, companies that subscribe to Agri Stats’ services account for more than 90% of broiler sales, 90% of turkey sales and 80% of pork sales in the United States
Agri Stats earlier cleared of anticompetitive behavior
The new lawsuit was filed, despite a federal judge earlier dismissing claims of anticompetitive behavior in another suit.
Agri Stats has been named as a defendant in multiple cases where broiler, turkey and pork companies have been accused on conspiring to limit supply and drive up the retail costs for poultry or pork.
In July, in a decision in the U.S. District Court for the Northern District of Illinois, Judge Thomas M. Durkin cleared Agri Stats of the allegations brought against it. The lawsuit was filed on behalf of poultry purchasers, and alleged Agri Stats and most of the nation’s top poultry producers conspired.
“Despite years of discovery, plaintiffs simply have not produced sufficient evidence for a reasonable jury to find by a preponderance of the evidence that Agri Stats agreed with the producer defendants to restrict supply and increase the price of broilers,” Durkin wrote in his opinion.
The judge’s opinion also found that Agri Stats reports include only the production and pricing information of the recipient producer receiving the report, and not information concerning the competitors.
“The lack of production and pricing information in the Agri Stats reports undermines their usefulness for communicating intent to reach agreement to reduce production, as plaintiffs originally alleged,” Durkin wrote.
Agri Stats to defend itself
Also in its statement, Agri Stats said it would defend itself in court.
“Agri Stats plans to vigorously defend the DOJ lawsuit just like the company defended the … broiler chicken antitrust litigation class action lawsuit. The antitrust laws seek to foster competition that benefits consumers in the form of improved efficiency and lower prices – precisely the benefits that Agri Stats’ benchmarking services provide,” the company stated.
“Agri Stats appreciates the continued support and trust of our customers and business partners, and looks forward to the day when it can put baseless antitrust allegations in the rearview mirror and focus solely on the hard work of helping protein industries in the United States – that are the envy of the world – continue to thrive.”