Price-Rigging in the Poultry Industry: Agri Stats Subscription-Based Industry Data Service Under Fire from DOJ

Back in 2017, Bloomberg published an article sounding the alarm bells on a service called “Agri Stats.” Agri Stats is a private service that produces confidential weekly reports based off data gathered from poultry processors, which it then distributes to companies paying for a subscription to the service. Agri Stats differs from information services used by other industries in both the level of detail provided and the speed the information is made available to those with a subscription; reports include statistics which range from bird sizes, to product mix, to financial returns of plants who participate in the service but are kept anonymous in reports, or over 95% of United States poultry processors in total.

Agri Stats maintains that the intensive reports it provides to its subscribers violates no antitrust laws, stating that the information they provide is historical in nature and includes no information about future pricing. However, the intensive level of detail provided by Agri Stats combined with the secrecy surrounding the reports has drawn critics. By providing subscribers with the prices per pound of different companies’ product mixes along with the specifics of what each mix includes, subscribers are able to effectively anticipate the future actions of their competitors along with future pricing. Another troubling aspect of Agri Stats reports is their inclusion of a caloric breakdown of the feed used by participating plants, information which can be used by companies to match their calorie counts with competitors in order to maximize profits per bird. There is nothing inherently illegal about providing subscribers with this information, as illegal collusion occurs when companies plan with one another to cut production ahead of time with the specific intent of raising prices. Law professor at the University of Wisconsin and former Justice Department antitrust lawyer who has studied Agri Stats while researching the modern poultry industry, Peter Carstensen, states that the level of detail provided in Agri Stats reports is unusual because unlike similar reports in other industries which stick to averages and more general information, Agri Stats provides enough information for participants to collude with each other and ensure everyone is upholding their end of the deal. It is also alleged that the anonymity provided by Agri Stats is weak as a result of Agri Stats “Bottom Line Report” which breaks down key financial metrics including interest expenses, as lawyers state it is relatively easy to match any anonymous data against publicly available records.

There have been numerous lawsuits filed against Agri Stats as a result of suspected antitrust violations, but none have gotten anywhere. Since 2017, the questionable behaviors surrounding Agri Stats have given rise to a landmark price-fixing lawsuit in which Maplevale Farms allege that the largest poultry companies coordinated process between 2008 and 2016, resulting in a 50% increase in price for broiler chicken despite decreases in the costs of inputs like chicken feed. Maplevale alleges that Agri Stats played a key role in making it possible for companies to collude on price increases and other companies including Walmart have since filled lawsuits making similar allegations. In separate lawsuits farmers also allege that poultry companies use Agri Stats to coordinate and decrease farmer’s wages. All of these allegations have been denied by the accused poultry companies. The allegations also claim that the poultry industry as it currently exists, is highly consolidated, with just two companies, Tyson and Pilgrim’s Pride, controlling about 40% of the market, and the top 10 poultry companies controlling nearly 80% of the market.

The lawsuit became all the more intense when on June 21, 2019, the DOJ stepped in and asked the U.S. District Court for the Northern District of Illinois to stop discovery in Maplevale’s class-action lawsuit, saying in a motion that they required a limited stay in order to protect the investigation by the grand jury. The stay applies to “all defendant employee and former employee depositions,” and was granted temporarily, waiting for the results of a hearing on the Department of Justice’s request for a six-month stay. This intervention by the DOJ is significant because it indicates the DOJ believes there have been one or more real and serious violations requiring grand jury inquiry and potential criminal indictments. This would be monumental for victims of this alleged price fixing, as currently the poultry companies being accused of colluding through use of Agri Stats control around 90% of the poultry industry. The DOJ stated they would also charge those who played significant roles in price fixing, which means Agri Stats could be included as well and receive penalties.

Within the past days, the Department of Justice’s request for a six-month stay was granted by the court, though it was shortened to three months.

by Kalyan Emerick

About the author: USIRCC