The Broiler Chicken lawsuit

In In re Broiler Chicken Litigation, Plaintiffs allege that defendant broiler-producers conspired to fix the price of broilers by agreeing to restrict supply and sharing competitively sensitive price and production information.  Agri Stats allegedly facilitated the conspiracy by aggregating data from the producers and publishing benchmarking reports that allegedly allowed the producers to “monitor[] and enforce[] defendants’ conspiracy.”¹ Plaintiffs alleged that the result of the putative conspiracy was “unprecedented capacity reductions, steadily increasing prices, and record profits.”²

Court rules that information exchanges are not inherently anticompetitive

Plaintiffs’ allegations against Agri Stats were based on the claim that Agri Stats reports allegedly allow recipients to monitor each other’s broiler chicken output and prices in furtherance of a purported agreement to reduce the supply of broiler chicken.  Plaintiffs alleged that the Agri Stats reports contained “producer-specific production” and price data that “Defendants were able to ‘deanonymize’” to facilitate and enforce the alleged conspiracy.³

On summary judgment, Agri Stats argued that its benchmarking reports do not include any competitor production or pricing information, and therefore could not facilitate the alleged conspiracy.  The court agreed.  In its opinion granting Defendant Agri Stats’ motion for summary judgment, the court found that “the lack of production and pricing information in the Agri Stats reports undermines their usefulness for communicating intent to reach agreement to reduce production . . . and that “[g]reater information exchange alone does not demonstrate a conspiracy.”  In addition, the court found that “the act of trying to deanonymize information in the Agri Stats reports is not evidence of a conspiracy,” and that given the broad distribution of the benchmarking reports throughout the broiler chicken industry, it would be “irrational  . . . to refrain from participation in Agri Stats when all your competitors are doing so.”⁴

Broiler Chicken opinion helps fill guidance vacuum left by FTC and DOJ regarding legality of information exchanges 

The court’s opinion is significant not only for rejecting plaintiffs’ legal theory, but also because of the increased focus on information exchanges by government enforcers.  Both the Department of Justice (DOJ) and Federal Trade Commission (FTC) (the Agencies) recently rescinded long-standing joint policies focused on the health care industry, one of which created a safe harbor for information exchanges when the information exchanged is historical, aggregated, and anonymized by a third party.  The Agencies flagged that the supposedly “outdated” guidance regarding information exchanges was a reason for withdrawing the policies.⁵

As a result, there is currently no official guidance from the Agencies on what kind of information exchanges will be considered presumptively legal (if any).  The 2023 Draft Merger Guidelines (the revised guidelines) that were released earlier this month mention information exchanges in the context of the Agencies’ merger review process, and cite “information sharing arrangements” as a factor the agencies will consider when assessing “market transparency,” which is included in the revised guidelines as a “secondary factor” the agencies will analyze when determining whether a “merger may meaningfully increase the risk of coordination, even absent the primary risk factors.⁶ Notably, the 2023 Draft Merger Guidelines do not offer any distinguishing characteristics for what the agencies may consider a “reasonable” exchange of information among competitors in the context of a merger review.  And, since the draft guidelines are limited to merger considerations, they do not provide any insight on how the Agencies will assess the legality of information exchanges outside of the merger context.           

Looking ahead

The court’s opinion granting summary judgment for Agri Stats in Broiler Chicken—which adhered to some of the guidance on information exchanges recently abandoned by the FTC and DOJ— suggests that judges may be unaffected by the agencies’ unilateral policy changes upending years of prior antitrust guidance.  In the face of the rescinded health care policy statements and the draft revised merger guidelines that abandon decades of past practice, the courts may lead the way in providing a much-needed consistent and administrable interpretation of the antitrust laws.  Whether the analysis adopted by the court with respect to information changes in the Broiler Chicken case will extend to other private antitrust litigation remains to be seen: similar issues continue to  be litigated in major class action lawsuits alleging that information exchanges violate the antitrust laws.  The court’s decision in favor of Agri Stats in the Broiler Chicken case should be considered a significant indicator of courts’ potential skepticism of such theories of harm.

Authored by Tripp Monts, Justin Bernick, Liam Phibbs, and Jill Ottenberg.

References

1 Commercial and Institutional Indirect Purchaser Plaintiffs’ Third Amended Class Action Complaint, In re Broiler Chicken Antitrust Litigation, 1:16-cv-08637  (N.D. Ill. Dec. 16, 2016), ECF No. 253 (Broilers Complaint) at 34.  

2 Id. at 106.

3 Memorandum Opinion and Order, In re Broiler Chicken Antitrust Litigation, 1:16-cv-08637  (N.D. Ill. June 30, 2023), ECF No. 6641 (Summary Judgment Opinion) at 56.

4 Summary Judgment Opinion at 55.

5 See Department of Justice press release, Justice Department Withdraws Outdated Enforcement Policy Statements (Feb. 3, 2023) available here; see also Federal Trade Commission press release, Federal Trade Commission Withdraws Health Care Enforcement Policy Statements (July 14, 2023) available here.

6 See Department of Justice and Federal Trade Commission Draft Merger Guidelines (July 2023) available here.