Your compliance team might be wondering about the implications of sharing industry data. The Justice Department's settlement with Agri Stats Inc. clarifies the boundary between legitimate benchmarking and anticompetitive information exchange. Here's what you need to know.
Understanding the Agri Stats Settlement
The Agri Stats settlement has caught the attention of compliance professionals in industries like manufacturing, agriculture, logistics, and healthcare. Agri Stats collected and redistributed pricing, output, and cost data from competing meat processors, keeping this information from buyers such as restaurants and grocery stores.
The settlement requires Agri Stats to stop sharing sales reports and non-public pricing information, cease company-level and facility-level production reporting, and make most data available to all interested purchasers. It also mandates an antitrust compliance program with data security controls, whistleblower protections, and mandatory violation reporting.
If your team is involved in industry benchmarking, trade association data pools, or third-party analytics services, these developments are relevant to you.
Evaluating Your Benchmarking Service
If you're subscribed to an industry benchmarking service, it's important to evaluate how it operates.
The Agri Stats case highlighted issues with granular data shared only among competitors, which reduced competition. Your service is likely safer if it:
- Aggregates data to prevent identification of individual companies
- Uses historical data instead of real-time figures
- Shares reports with all market participants, including customers
- Focuses on operational metrics rather than pricing strategies
Ask your vendor: Who receives these reports? How recent is the data? Can individual companies be identified? If the answers suggest exclusivity among competitors, recent data, and identifiable companies, you may have a problem.
Legal vs. Illegal Information Sharing
The Sherman Act prohibits agreements that restrain trade. Information exchanges can lead to price or output coordination even without explicit agreements.
Legal benchmarking involves:
- Aggregated, anonymized data
- Historical information (generally three months old or older)
- Broad distribution, including to customers
- A focus on improving operations
The Justice Department warns that if companies share information with competitors but not the broader market, it's a red flag for anticompetitive behavior.
If you're uncomfortable sharing a benchmarking report with customers, consider why. Transparency matters.
Sharing Cost Data Through Trade Associations
Sharing cost data can be less risky than pricing data, but detailed cost and production data can still suppress competition.
The Agri Stats settlement prohibits reporting detailed production, cost, and labor data that enables output coordination.
Your trade association's cost survey is safer if it:
- Reports industry averages, not specific figures
- Uses broad categories
- Covers historical periods
- Includes enough participants to prevent reverse-engineering
Document the business justification, such as improving safety or reducing waste.
Designing an Antitrust Compliance Program
The Agri Stats settlement outlines essential components for a compliance program:
- Data security to prevent unauthorized sharing
- Whistleblower protections
- Mandatory reporting of potential violations
For your program:
- Train employees on information exchange risks with practical examples.
- Require legal review before joining data-sharing initiatives.
- Provide clear reporting channels for concerns about competitor interactions.
- Monitor and audit data exchanges to ensure compliance.
The Federal Sentencing Guidelines for Organizations reward efforts to prevent and detect violations. Your program should be genuine and effective.
Addressing Existing Data-Sharing Arrangements
If you're in a data-sharing arrangement similar to Agri Stats, consult legal counsel immediately. The Justice Department may work with you to restructure problematic arrangements.
Consider modifying the arrangement to:
- Broaden access to include customers
- Aggregate data to prevent identification
- Use historical data
- Exclude pricing and output data
Document your analysis and actions. If questioned later, you'll need evidence of risk identification and response.
Recognizing Antitrust Scrutiny
You might not know if your industry is under scrutiny until it's too late, but watch for:
- Civil investigative demands or subpoenas
- DOJ or FTC presence at conferences
- Whistleblower complaints or lawsuits
- Public statements from enforcement agencies
The Justice Department encourages reporting through its Citizen Complaint Center and the Agricultural Markets Enforcement Partnership at farmerfairness.gov.
If your compliance program identifies a potential violation, the DOJ's Leniency Program may offer protection for self-reporting before an investigation begins. Consult outside counsel for guidance.
Next Steps
Start with your antitrust counsel. Each industry has unique dynamics, and the line between helpful benchmarking and harmful coordination varies.
Review the proposed settlement and competitive impact statement in the Federal Register. The public comment period provides insight into the Justice Department's stance on information exchanges.
Audit your current data-sharing relationships now. The question isn't whether your industry uses benchmarking, but whether your program would withstand scrutiny like Agri Stats did.
