The attorneys general from of Minnesota, California, North Carolina and Tennessee have joined the U.S. Department of Justice in its civil antitrust lawsuit against Agri Stats for organizing and managing anticompetitive information exchanges among broiler chicken, pork and turkey processors.

The amended complaint, filed in the District of Minnesota, alleges the company has violated Section 1 of the Sherman Act by collecting, integrating and distributing competitively sensitive information related to price, cost and output among competing processors.

“Over the past two decades, Agri Stats has recruited and enabled all major U.S. chicken, pork and turkey processors to exchange competitively sensitive information through its exclusive subscription and consulting business,” the complaint states.

Agri Stats audits the data provided by processors, manipulates it to facilitate comparisons and distributes it back to processors in a variety of different reports, according to the complaint.

Processor profits

“By design, Agri Stats focuses on raising industry-wide profitability of the meat industries it serves, which could harm competition,” the complaint states.

Agri Stats encourages processors to increase prices and restrict output to boost profits industrywide, the complaint alleges.

“Using these (sales) reports, processors target products priced low compared to their competitors’ products for price increases,” the complaint states.

“Other Agri Stats reports provide processors with metrics allowing them to forecast and monitor competitive output and confidently restrain production when it is profitable to do so, which can lead to higher prices,” the complaint states.

Industry information

Even though Agri Stats masks some of the information it collects, processors receive enough detailed data to allow them to forecast the plans of competitors, the complaint states.

“Further, Agri Stats tells these processors how to use the information to weaken competition. Agri Stats sells consulting services to the processors and has advised nearly all of the major processors in the broiler chicken, pork and turkey industries — often with individual employees advising several competing processors simultaneously,” the complaint states.

Participating processors account for at least 90% of broiler chicken sales, at least 80% of pork sales and about 90% of turkey sales in the U.S., according to the complaint.

Agri Stats’ rebuttal

“Nothing about the addition of the four state plaintiffs does anything to overcome DOJ’s failure to show how Agri Stats reports could possibly result in higher prices,” said Justin Bernick, Agri Stats’ attorney.

“DOJ has done nothing more than parrot the same allegations made by class action plaintiff lawyers that already have been rejected by both a federal judge on summary judgment and a jury after a six-week trial,” he said in an email response to Capital Press’ request for comment.

“The fact that Minnesota, California, North Carolina, and Tennessee jumped on DOJ’s bandwagon to gang up on a Fort Wayne small business — without ever even asking Agri Stats a single question about the company’s reports — is a sad commentary on their due diligence in antitrust enforcement,” he said.

DOJ previously recognized there was no evidence of wrongdoing by Agri Stats after it investigated the company for two years over a decade ago and closing the investigation in 2012, the company stated.