Pheasant Surprise
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Interesting US-based blog article, reminded me of the Gatekeeper thread.
Ag Data and Price Fixing
March 23, 2017
Federal law prohibits price fixing or collusion among competitors. As more ag data moves from farmers' tractors and computers into the cloud, the temptation to price fix by ag technology providers grows. Is it inevitable that sooner or later, ag data platform providers will conspire to fix prices?
Price fixing among competitors is illegal under Section 1 of the Sherman Antitrust Act:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
The penalties for violating this law can be severe. Any person who makes a contract or conspires to restrain trade is guilty of a felony, subject to a fine of up to $100 million and imprisonment up to 10 years.
Case law is full of examples of companies that have violated the Sherman Antitrust Act by sharing information, then using that information raise prices. For example, in US v. Container Corp., 393 US 333 (US 1969), shipping companies agreed to exchange price data among themselves, and this was enough to violate the Act. The Container case is notable because it did not involve an agreementto fix prices--just an agreement to share data that resulted in price collusion.
The exchange of ag data could likewise cause price fixing where the companies with access to ag data also have access to competitor's data. Here is a hypothetical.
Acme Fertilizer Company collects data from its growers about the types and prices of fertilizer Acme's growers are applying. Growers share this information with Acme so that Acme's agronomists can make recommendations for future plantings.
Acme's growers also upload data about fertilizer purchased elsewhere. Acme's employees view the competitor's data, realize its growers are paying more for fertilizer from competitor Beta Fertilizer Company. Acme raises prices.
The same result could occur if Acme and Beta enter into a data sharing agreement that allows their farmers to share data between their platforms. This may seem like a benefit to the farmer, as it eases data transfer, but the result could lead to higher prices. Perhaps farmers share the same agronomist, who uploads data from both companies into the same platform. If Acme and Beta can view this data as well, the building blocks for price fixing have been laid.
Poultry growers have already filed a lawsuit that alleges that pricing data sharing among integrators, even though allegedly "anonymized," resulted in price fixing. The poultry growers' suit is interesting because the growers allege that price data for individual farms was not shared, but instead determined by some reverse engineering.
I do not know of any companies that are using ag data to collude and raise prices today. But as tough economic times drive more companies to merge and share data with other companies, the temptation to price fix will grow.
http://www.aglaw.us/janzenaglaw/2017/3/16/ag-data-and-price-fixing
Ag Data and Price Fixing
March 23, 2017
Federal law prohibits price fixing or collusion among competitors. As more ag data moves from farmers' tractors and computers into the cloud, the temptation to price fix by ag technology providers grows. Is it inevitable that sooner or later, ag data platform providers will conspire to fix prices?
Price fixing among competitors is illegal under Section 1 of the Sherman Antitrust Act:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
The penalties for violating this law can be severe. Any person who makes a contract or conspires to restrain trade is guilty of a felony, subject to a fine of up to $100 million and imprisonment up to 10 years.
Case law is full of examples of companies that have violated the Sherman Antitrust Act by sharing information, then using that information raise prices. For example, in US v. Container Corp., 393 US 333 (US 1969), shipping companies agreed to exchange price data among themselves, and this was enough to violate the Act. The Container case is notable because it did not involve an agreementto fix prices--just an agreement to share data that resulted in price collusion.
The exchange of ag data could likewise cause price fixing where the companies with access to ag data also have access to competitor's data. Here is a hypothetical.
Acme Fertilizer Company collects data from its growers about the types and prices of fertilizer Acme's growers are applying. Growers share this information with Acme so that Acme's agronomists can make recommendations for future plantings.
Acme's growers also upload data about fertilizer purchased elsewhere. Acme's employees view the competitor's data, realize its growers are paying more for fertilizer from competitor Beta Fertilizer Company. Acme raises prices.
The same result could occur if Acme and Beta enter into a data sharing agreement that allows their farmers to share data between their platforms. This may seem like a benefit to the farmer, as it eases data transfer, but the result could lead to higher prices. Perhaps farmers share the same agronomist, who uploads data from both companies into the same platform. If Acme and Beta can view this data as well, the building blocks for price fixing have been laid.
Poultry growers have already filed a lawsuit that alleges that pricing data sharing among integrators, even though allegedly "anonymized," resulted in price fixing. The poultry growers' suit is interesting because the growers allege that price data for individual farms was not shared, but instead determined by some reverse engineering.
I do not know of any companies that are using ag data to collude and raise prices today. But as tough economic times drive more companies to merge and share data with other companies, the temptation to price fix will grow.
http://www.aglaw.us/janzenaglaw/2017/3/16/ag-data-and-price-fixing