(Lack of) Competition, Coordination, and Information Sharing in the Pork Industry: United States, 2009–2020

• DOI: http://doi.org/10.1177/0003603X221149367
• Published date: 01 March 2023
• Date: 01 March 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221149367

The Antitrust Bulletin

2023, Vol. 68(1) 117 –136

© The Author(s) 2023

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0003603X221149367

journals.sagepub.com/home/abx

Article

(Lack of) Competition, Coordination,

and Information Sharing in the Pork

Industry: United States, 2009–2020

Javier D. Donna*,** and Anita N. Walsh*

Abstract

In 2020, an antitrust lawsuit was filed against the Pork Integrators alleging a §1 Sherman Act violation.

At the center of the Lawsuit, there is an alleged exchange of atomistic information about the Pork

integrators’ operations using Agri Stats, Inc. as a clearinghouse. We use the Supreme Court benchmark

in American Column & Lumber to discuss two questions that arise from the Lawsuit. The first is whether

the association of Pork Integrators and Agri Stats, Inc., resulted in the restraint of interstate commerce,

the main specific issue at stake in the pork Lawsuit. The second is whether information-exchange

agreements using clearinghouses like Agri Stats, Inc., lessen competition and offend U.S. antitrust law,

a more general issue beyond the pork Lawsuit. We find that there appears to be ample evidence in

the Lawsuit to merit prosecution regarding both trade restraints and information-sharing agreements.

We conclude by discussing the role of the Agencies in setting the standards in information-exchange

agreements.

Keywords

antitrust, price-fixing, competition, information sharing, cartel, pork industry

I. Introduction

In 2020, an antitrust lawsuit was filed against the Pork Integrators and Agri Stats, Inc., alleging a §1

Sherman Act violation.1 The Lawsuit alleges that the Defendants engaged in a price-fixing conspiracy

to fix, raise, artificially maintain, and stabilize the pork price in the U.S. domestic market.2

*Department of Economics, University of Florida, Gainesville, FL, USA

**The Rimini Centre for Economic Analysis, Rimini, Italy

Corresponding Author:

Javier D. Donna, Department of Economics, University of Florida, 224 Matherly Hall, P.O. Box 117140, Gainesville, FL 32611-

7140, USA.

Email: jdonna@ufl.edu

1149367ABXXXX10.1177/0003603X221149367The Antitrust BulletinDonna and Walsh

research-article2023

1. Henceforth, Agri Stats refers to Agri Stats, Inc., and its subsidiary, Express Markets, Inc., also known as EMI. The Plaintiffs

are identified in Section III(A) of the Lawsuit. The Pork Integrator Defendants are Clemens Food Group, LLC; Hormel

Foods Corporation; Hornell Foods, LLC; Indiana Packers Corporation; JBS USA Food Company; Seaboard Foods LLC;

Seaboard Corporation; Smithfield Foods, Inc.; Triumph Foods, Inc.; Tyson Foods, Inc.; Tyson Prepared Foods, Inc.; and

Tyson Fresh Meats, Inc.

2. In Re Pork Antitrust Litigation. “Case Number: 0:18-cv-01776-JRT-HB,” United States District Court, District of

Minnesota, Filed: Jan. 15, 2020, hereinafter Lawsuit. In Oct. 2020, the judge overseeing the litigation, John R. Tunheim,

denied the Defendants’ joint Motion to Dismiss but granted an individual Motion to Dismiss to Indiana Packers.

118 The Antitrust Bulletin 68(1)

At the center of the Lawsuit, there is an alleged exchange of detailed, atomistic information about

the Pork integrators’ operations, using Agri Stats as a clearinghouse. The Lawsuit alleges that Agri

Stats collected, classified, audited, and distributed extremely sensitive information regarding price,

inventories, and quantities—the type of information that rivals would not share in a healthy, competi-

tive market—even training the firms regarding how to properly submit their data.3

In this Article, we analyze the Lawsuit using the Supreme Court benchmark in American Column &

Lumber.4 Our analysis does not assess nor intend to assess whether the Pork Integrators and Agri Stats

are innocent or guilty. It is up to the courts to reach such judgment. Instead, we discuss the allegations

in the Lawsuit and review the evidence related to the antitrust challenges.5

A fundamental question is whether competition, as understood by Congress when the Sherman Law

was passed, is consistent with data-sharing schemes like the one performed by Agri Stats. In which

cases does such conduct deserve special scrutiny?

We discuss these issues using the Supreme Court evidentiary standards contained in American

Column & Lumber. We discuss several similarities and differences between the Open Competition Plan

from American Column & Lumber and Agri Stats, including the information-sharing structures, alleged

coordination, reporting errors, whether the data were public or proprietary, and evidence about output

and prices. We discuss the evidence in the Lawsuit regarding whether the association of Pork Integrators

and Agri Stats might have resulted in restraint of interstate commerce, whether information-exchange

agreements using clearinghouses like Agri Stats restrain competition, and the limits imposed by anti-

trust law on such coordination.

The Article proceeds as follows. Section II presents the allegations in the Lawsuit. Section III

discusses the main features of the U.S. pork industry. Section IV outlines the evidentiary standards

contained in American Column & Lumber. Section V compares the standards in American Column

& Lumber and Agri Stats. Section VI concludes.

II. Lawsuit Summation

The Lawsuit details allegations that a cartel comprised of the Pork Integrators conspired to fix pork

prices by systematically lowering pork production from 2009 to 2020. To ensure compliance, the

alleged cartel relied on a subscription service provided by Agri Stats, which included “current and

3. See the guidelines issued by the Federal Trade Commission and Department of Justice, Antitrust Guidelines for

CollAborAtions AmonG Competitors (2010), http://www.ftc.gov/system/files/documents/public_statements/300481/0004

07ftcdojguidelines.pdf (accessed May 3, 2022). See also the roundtable on information exchanges by the Organisation for

Economic Co-operation and Development, informAtion exChAnGes between Competitors under Competition lAw, OECD

Policy Roundtables, DAF/COMP(2010)37 (2010), https://www.oecd.org/competition/cartels/48379006.pdf (accessed

May 3, 2022) (hereinafter OECD 2010). Specifically, “Buying collaborations also may facilitate collusion by standard-

izing participants’ costs or by enhancing the ability to project or monitor a participant’s output level through knowledge

of its input purchases,” Federal Trade Commission and Department of Justice (2010) at 14. “Other things being equal, the

sharing of information relating to price, output, costs, or strategic planning is more likely to raise competitive concern than

the sharing of information relating to less competitively sensitive variables. Similarly, other things being equal, the sharing

of information on current operating and future business plans is more likely to raise concerns than the sharing of historical

information. Finally, other things being equal, the sharing of individual company data is more likely to raise concerns than

the sharing of aggregated data that does not permit recipients to identify individual firm data.” Federal Trade Commission

and Department of Justice (2010) at 15–16. “Information collected and verified by third parties such as auditing firms may

strengthen collusion as this may be a mechanism for the colluding parties to verify the accuracy and correctness of the data,

given the incentive for cheating that exists in a cartel.” OECD (2010) at 378.

4. American Column Co. v. United States, 257 U.S. 377 (1921).

5. We rely on the Lawsuit and the cited sources regarding the evidence discussed. When analyzing the Lawsuit, we consider

all facts alleged in the Lawsuit as true to investigate the feasibility of the Lawsuit for “relief that is plausible on its face.”

Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).