Antitrust Case Against Ag Data Firm

Justice Department Sues Pork, Poultry Data Collection Firm Agri Stats

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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This chart shows price movement for hogs. An Indiana company, Agri Stats, collects detailed information from pork, broiler chicken and turkey companies and sends reports back to the companies. The Justice Department filed a complaint alleging that data cooperation has led to companies restraining supplies and raising prices for consumers. (DTN ProphetX file image)

OMAHA (DTN) -- The U.S. Justice Department on Thursday filed a civil antitrust lawsuit against a data company for the meat industry called Agri Stats. The company has fought several similar antitrust lawsuits from food retailers and others in recent years.

The complaint, filed in the U.S. District Court for Minnesota, alleges meat companies used gleaned information from reports generated by Agri Stats to increase prices and reduce meat supplies. Companies used the reports to push up exports to reduce U.S. domestic supplies and drive up costs to U.S. food companies, retailers and consumers in the process, the Department of Justice alleges.

Agri Stats, based in Fort Wayne, Indiana, has built a business model collecting detailed production and processing information from companies in the broiler chicken, pork and turkey industries. The company churns out weekly and monthly reports for meat processors, who use the data to set their prices and production levels, the DOJ complaint stated. The reports detail everything from the volume of baby chicks hatched to the cost for workers and compensation paid to farmers, as well as output from processing plants.

The antitrust lawsuit from the Justice Department comes just months after a U.S. federal judge had granted Agri Stats a summary judgement in a lawsuit filed against the company accusing it of antitrust violations in the broiler industry. That case had been filed by companies that purchased broilers or were indirectly affected by higher prices.

Agri Stats did not reply to a request for comment from DTN, but the company's president, Brian Snyder, had stated after the June court decision, "Agri Stats looks forward to the end of the baseless antitrust lawsuits against the company and the industry, so that we can focus on our core mission of helping to improve efficiency in the protein industry for our subscribers."

The DOJ lawsuit alleges Agri Stats violated the Sherman Antitrust Act in the broiler, pork and turkey industries going back to 2008. The Justice Department seeks to permanently prohibit Agri Stats from sharing sensitive information among industry competitors.

DOJ alleges Agri Stats and the meat companies working with it were conspiring to exchange competitive information as a way to protect meat prices and profits. The nature of the data sharing of sensitive information, "unreasonably restrains trade," suppresses competition, limits supply and increases prices, DOJ stated.

The lawsuit stated Agri Stats "operates as an information-sharing scheme" that allows broiler, pork and turkey processors to exchange competitive information such as production and sales "that is comprehensive, granular, current and available exclusively to processors." Some limited versions of their reports are then provided to a select group of companies with connections to the poultry or pork industries, such as pharmaceutical companies.

Agri Stats receives data from 17 different broiler companies, eight pork companies and 14 turkey companies and distributes reports back out to those various companies about market conditions. The Justice Department stated those companies account for 90% of the broiler sales, 80% of pork sales and 90% of turkey sales in the U.S.

The Justice Department complaint went into details about the reams of data that Agri Stats compiles and delivers back to the various companies. These companies send "vast quantities" of production information and sales information directly to Agri Stats' systems. The Justice Department points to weekly books that provide comprehensive information about competitors' operations and performance. The reports contain thousands of data points that allow companies to know what their competitors were doing.

"Agri Stats uses its position as a third-party intermediary to ensure that each processor contributes complete information to further the overall cooperative objective: increased profits for all processors."

Reports could break down into details such chicken breast sales, and how those chicken breasts are cut, such as whole, sliced, diced, strips or trimmed of fat. Then reports show how that meat was preserved, such as frozen, with carbon dioxide or poly bagged, and then how they were packaged for sale. These detailed categories allowed processors to compare prices on similar items and raise prices on some relatively low-priced products, for instance, with confidence they would not lose sales to rivals.

DOJ stated Agri Stats made some attempts to provide some anonymity to information. Companies were largely able to link data to individual processors and facilities. The lawsuit points to executives who have made comments or testified that they were able to identify information in reports from competitors down to individual processing plants.

Companies would hold staff meetings to identify certain competitors. The court complaint also cited a situation in 2017 when a Smithfield executive asked why Seaboard's information was not showing up on a report.

Processor executives at times would cite Agri Stats information to explain to investors why they were not going to increase production, for instance. Executives could look at the data and determine that their competitors were not expanding production.

The situation with processors was a "give-to-get" policy that caused Agri Stats to reject efforts by large meat buyers and labor unions to buy the information. Agri Stats had stated the company didn't want to get in the way of the relationship between processors and buyers.

Beyond collecting data and generating its reports, Agri Stats often would send out staff to meet with processors to discuss with them how to use the data the company generates. "Agri Stats has touted its ability to identify opportunities to raise prices as a selling point," DOJ stated.

The complaint cites situations when Tyson Foods, Sanderson Farms, Cargill, Butterball and JBS each used Agri Stat reports to raise prices of their chicken, turkey or pork products. Companies also used the reports to restrict supplies as well, leading to inflated prices.

DOJ also pointed to instances in which companies such as Smithfield Foods, Tyson Foods and Seaboard were exporting pork products, "even when export sales result in a loss," as a way to restrain domestic pork supplies. Higher exports meant increased domestic prices.

At times, Agri Stats, in its analysis to companies, would praise them for restraint in controlling production volume because it supported favorable profitability for processors as well.

The Department of Justice complaint can be viewed here:….


Editor's Note: The DOJ complaint cites Agri Stats is owned by a consortium of individuals, including four senior Agri Stats officers and two foreign nationals, through a network of holding companies. According to the complaint, TBG AG (the Thyssen-Bornemisza Group), a Swiss venture capital firm, provided nearly all of the funding to purchase Agri Stats.

DTN is owned by TBG AG, but there is no connection between DTN and Agri Stats.

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Chris Clayton