throbber
Case 3:21-cv-00798-GLS-ML Document 1 Filed 07/13/21 Page 1 of 80
`
`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF NEW YORK
`
`COMPLAINT
`
`Case No. 3:21-CV-798 (GLS/ML)
`
`Jury Trial Demanded
`
`AMORY INVESTMENTS LLC,
`
`Plaintiff,
`
`-vs.-
`
`AGRI STATS, INC.; CLEMENS FOOD
`GROUP, LLC; CLEMENS FAMILY
`CORPORATION; HORMEL FOODS
`CORPORATION; JBS USA FOOD
`COMPANY; SEABOARD FOODS LLC;
`SMITHFIELD FOODS, INC.; TRIUMPH
`FOODS, LLC; TYSON FOODS, INC.;
`TYSON PREPARED FOODS, INC.; and
`TYSON FRESH MEATS, INC.,
`
`Defendants.
`
`

`

`Case 3:21-cv-00798-GLS-ML Document 1 Filed 07/13/21 Page 2 of 80
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`
`
`TABLE OF CONTENTS
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`Page
`
`I. NATURE OF ACTION ......................................................................................................... 1
`
`II.
`
`JURISDICTION AND VENUE ............................................................................................ 4
`
`III. PARTIES ............................................................................................................................... 5
`
`A. Plaintiff ............................................................................................................................ 5
`
`B. Defendants ....................................................................................................................... 5
`
`IV.
`
`FACTUAL ALLEGATIONS .............................................................................................. 8
`
`A. Agri Stats’ Central Role In Collusion In The Broiler Chicken Industry. ........................ 9
`
`B. Agri Stats Began Marketing Its Collusive Scheme To Pork Integrator Defendants...... 10
`
`C. Agri Stats Allowed Pork Integrators To Monitor Each Other’s Pricing And Production,
`And To Discipline Co-Conspirators For Not Complying With The Collusive
`Agreement. ..................................................................................................................... 13
`
`D. Defendants Controlled The Supply And Production Of Pork In The United States,
`Which Allowed The Scheme To Succeed. .................................................................... 22
`
`E. The Level Of Concentration In The Pork Industry Facilitated Defendants’ Collusive
`Scheme. .......................................................................................................................... 26
`
`F. The Inelastic Demand For, And Homogeneity Of, Pork Products Facilitated Collusion ... 31
`
`G. Defendants Took Advantage Of Numerous Opportunities To Collude. ............................ 32
`
`H. Defendants Implemented Capacity And Supply Restraints During The Relevant Period. . 40
`
`1. Summary of Defendants’ Conspiratorial Supply Restraints........................................ 40
`
`2. Timeline of the Conspiracy ....................................................................................... 46
`
`I. Abnormal Pricing During The Relevant Period Demonstrates The Success Of the
`Conspiracy. ..................................................................................................................... 60
`
`1. The average hog wholesale price experienced an unprecedented increase beginning in
`2009. ......................................................................................................................... 60
`
`2. The pork cut-out composite price experienced a dramatic increase beginning in
`2009 and continuing throughout the Relevant Period.............................................. 62
`
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`3. Defendants’ revenues increased beginning in 2009, even taking into account
`Defendant-specific costs. ......................................................................................... 63
`
`J. Overcharges Due To The Cartel Were Reflected In Higher Pork Prices Than Would
`Have Existed In the Absence of Defendants’ Conspiracy. ............................................ 64
`
`K. The Results of the DOJ’s Criminal Investigation in Broilers Supports an Inference of
`the Existence of a Similar Conspiracy in the Pork Industry .......................................... 67
`
`L. Defendants Actively Concealed The Conspiracy, And Plaintiff Did Not And Could Not
`Have Discovered Defendants’ Anticompetitive Conduct. ............................................. 69
`
`V. ANTITRUST INJURY ...................................................................................................... 73
`
`VI. COUNT I: VIOLATION OF SECTION 1 OF THE SHERMAN ACT ............................ 74
`
`VII. REQUEST FOR RELIEF .................................................................................................. 76
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`VIII. JURY TRIAL DEMANDED ............................................................................................. 77
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`Case 3:21-cv-00798-GLS-ML Document 1 Filed 07/13/21 Page 4 of 80
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`Plaintiff Amory Investments LLC (“Plaintiff” or “Amory”), by and through its undersigned
`
`counsel, files this Complaint against the Defendants identified below, for their illegal conspiracy,
`
`which increased the prices of pork sold in the United States beginning at least as early as 2009 and
`
`continuing through the present. Plaintiff brings this action against Defendants for injunctive relief
`
`and treble damages under the antitrust laws of the United States, and demands a trial by jury.
`
`NATURE OF ACTION
`
`I.
`
`
`1.
`
`Defendants Clemens Food Group, LLC, The Clemens Family Corporation
`
`(“Clemens”); Hormel Foods Corporation (“Hormel”); JBS USA Food Company (“JBS”);
`
`Seaboard Foods LLC (“Seaboard”); Smithfield Foods, Inc. (“Smithfield”); Triumph Foods, LLC
`
`(“Triumph”); and Tyson Foods, Inc., Tyson Prepared Foods, Inc., and Tyson Fresh Meats, Inc.
`
`(“Tyson”) (collectively referred to at times as “pork integrator Defendants”) are the leading
`
`suppliers of pork1 in an industry with approximately $20 billion in annual sales. The United States
`
`pork industry is highly concentrated, with a small number of large companies controlling the
`
`supply. The pork integrator Defendants collectively control over 80 percent of the wholesale pork
`
`market.
`
`2.
`
`The pork industry is characterized by several other factors conducive to the
`
`anticompetitive conduct alleged herein, including: vertically integrated operations; high barriers to
`
`entry preventing competitors from coming into the market; consolidation and concentration; inelastic
`
`supply and demand; and homogeneity of pork products.
`
`3.
`
`Defendant Agri Stats, Inc. (“Agri Stats”) is a specialized information-sharing
`
`service that, among other things, obtains data from participating industry producers and develops
`
`
`1 For the purposes of this complaint, “pork” includes pig meat purchased fresh or frozen, smoked
`ham, sausage, and bacon. In this complaint, “pork” and “swine” are often used interchangeably.
`
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`comprehensive reports based on that data. Agri Stats provides its reports and findings to the
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`participating industry producers.
`
`4.
`
`From at least 2009 to the present (the “Relevant Period”), the pork integrator
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`Defendants and Defendant Agri Stats entered into a conspiracy to fix, raise, maintain, and stabilize
`
`the price of pork.
`
`5.
`
`One method by which Defendants implemented and executed their conspiracy was by
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`coordinating output and limiting production with the intent and expected result of increasing pork
`
`prices in the United States.
`
`6.
`
`In furtherance of their conspiracy, Defendants exchanged detailed, competitively
`
`sensitive, and closely-guarded non-public information about prices, capacity, sales volume, and
`
`demand, including through their co-conspirator, Defendant Agri Stats.
`
`7.
`
`Beginning
`
`in at
`
`least 2009, Agri Stats began providing highly sensitive
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`“benchmarking” reports to the majority of pork integrators. Benchmarking allows competitors to
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`compare their profits or performance against that of other companies. However, Agri Stats’ reports
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`are unlike those of lawful industry reports. Agri Stats gathers detailed financial and production data
`
`from each of the pork integrators, standardizes this information, and produces customized reports and
`
`graphs for the pork integrator Defendants. The type of information available in these reports is not the
`
`type of information that competitors would provide each other in a normal, competitive market.
`
`8.
`
`Agri Stats collected the pork integrators’ competitively sensitive supply and pricing data
`
`and intentionally shared that information through detailed reports it provided to the pork integrators.
`
`On a weekly and monthly basis, Agri Stats provides the pork integrators with current and forward-
`
`looking sensitive information (such as profits, costs, prices and slaughter information), and regularly
`
`provides the keys to deciphering which data belongs to which participant. The effect of this
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`information exchange was to allow the pork integrators to monitor each other’s production and hence
`
`control supply and price in furtherance of their anticompetitive scheme.
`
`9.
`
`The data exchanged through Agri Stats is a classic enforcement and implementation
`
`mechanism of a price-fixing scheme. First, the data is current and forward-looking, which courts
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`consistently hold has “the greatest potential for generating anticompetitive effects.”2 Second,
`
`information contained in Agri Stats reports is specific to pork integrators, including information on
`
`profits, prices, costs, and production levels; instead of being aggregated as industry averages to avoid
`
`transactional specificity and the easy identification of specific integrators. Third, none of the Agri Stats
`
`information was publicly available. Agri Stats is a subscription service which required the pork
`
`integrator Defendants to pay millions of dollars over the Relevant Period—far in excess of any other
`
`pricing and production indices. Agri Stats ensured that its detailed, sensitive business information was
`
`available only to pork producers and not to the public or purchasers like Plaintiff. Defendants used the
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`information exchanges through Agri Stats in furtherance of their conspiracy to fix, raise, stabilize, and
`
`maintain artificially inflated prices for pork sold in the United States.
`
`10. Defendants’ restriction of pork supply had the intended purpose and effect of increasing
`
`pork prices to Plaintiff. Beginning in 2009, the earnings of the integrators began to increase, as they
`
`took an increasing amount of the profits available in the pork industry. As a result of Defendants’
`
`unlawful conduct, Plaintiff paid artificially inflated prices for pork during the Relevant Period. Such
`
`prices exceeded the amount it would have paid if the price for pork had been determined by a
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`competitive market. Thus, Plaintiff was injured by Defendants’ conduct.
`
`
`2 Todd v. Exxon Corp., 275 F.3d 191, 211 (2d Cir. 2001) (Sotomayor, J.) (quoting United States v.
`Gypsum Co., 438 U.S. 422, 441 n.16 (1978)).
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`II.
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`JURISDICTION AND VENUE
`
`11.
`
`Plaintiff brings this action under Sections 4 and 16 of the Clayton Act, 15 U.S.C.
`
`§§ 15 and 26, for injunctive relief and to recover treble damages and the costs of this suit, including
`
`reasonable attorneys’ fees, against Defendants for the injuries sustained by Plaintiff by virtue of
`
`Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1.
`
`12.
`
`This Court has jurisdiction under 28 U.S.C. §§ 1331, 1337, and Sections 4 and 16
`
`of the Clayton Act, 15 U.S.C. §§ 15(a) and 26.
`
`13.
`
`Venue is appropriate in this District under Sections 4, 12, and 16 of the Clayton
`
`Act, 15 U.S.C. §§ 15, 22 and 26 and 28 U.S.C. § 1391(b), (c) and (d), because one or more
`
`Defendants transacted business in this District, is licensed to do business or is doing business in
`
`this District, and because a substantial portion of the affected interstate commerce described herein
`
`was carried out in this District.
`
`14. This Court has personal jurisdiction over each Defendant because, inter alia, each
`
`Defendant: (a) transacted business throughout the United States, including in this District; (b)
`
`manufactured, sold, shipped, and/or delivered substantial quantities of pork throughout the United
`
`States, including this District; (c) had substantial contacts with the United States, including this
`
`District; and/or (d) engaged in an antitrust conspiracy that was directed at and had a direct,
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`foreseeable, and intended effect of causing injury to the business or property of persons residing in,
`
`located in, or doing business throughout the United States, including this District.
`
`15.
`
`The activities of the Defendants, as described herein, were within the flow of,
`
`were intended to, and did have direct, substantial and reasonably foreseeable effects on the
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`interstate commerce of the United States.
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`III. PARTIES
`
`A.
`
`Plaintiff
`
`16.
`
`Plaintiff Amory Investments LLC is a Delaware limited liability company which,
`
`on or around March 31, 2021, acquired various assets of Maines Paper & Food Service, Inc., and
`
`its affiliates (collectively “Maines”), including the claims that are the subject of this action. During
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`the Relevant Period, Maines had its principal place of business in Conklin, New York, and
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`purchased hundreds of millions of dollars of pork at artificially inflated prices directly from various
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`Defendants, and/or their affiliates or agents, and suffered injury to its business or property as a
`
`direct or proximate result of Defendants’ wrongful conduct.
`
`17.
`
`Amory is a “person” with standing to sue Defendants for damages and other relief
`
`under Section 1 of the Sherman Act, 15, U.S.C. § 1, and Sections 4 and 16 of the Clayton Act, 15
`
`U.S.C. §§ 15(a) & 26.
`
`B.
`
`Defendants
`
`
`
`(i) Agri Stats
`
`18.
`
`Agri Stats, Inc. is an Indiana corporation located in Fort Wayne, Indiana and, from
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`2013 until 2018, was a subsidiary of Eli Lilly & Co. Agri Stats is now a wholly owned subsidiary
`
`of Agri Stats Omega Holding Co. LP. Throughout the Relevant Period, Agri Stats acted as a co-
`
`conspirator and has knowingly played an important and active role as participant in, and a
`
`facilitator of, Defendants’ collusive scheme detailed in this Complaint. All of Agri Stats’ wrongful
`
`actions described in this Complaint are part of, and in furtherance of, the unlawful conduct alleged
`
`herein, and were authorized, ordered, or engaged in by Agri Stats’ various officers, agents,
`
`employers or other representatives while actively engaged in the management and operation of
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`Agri Stats’ business affairs within the course and scope of their duties and employment, or with
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`Agri Stats’ actual apparent or ostensible authority.
`
`
`
`(ii) Clemens
`
`19.
`
`Clemens Food Group, LLC is a limited-liability company headquartered in
`
`Hatfield, Pennsylvania. During the Relevant Period, Clemens Food Group, LLC and/or its
`
`predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
`
`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United
`
`States.
`
`20.
`
`The Clemens Family Corporation is a Pennsylvania corporation headquartered in
`
`Hatfield, Pennsylvania, and the parent company of Clemens Food Group, LLC. During the
`
`Relevant Period, The Clemens Family Corporation and/or its predecessors, wholly owned or
`
`controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or through its wholly
`
`owned or controlled affiliates, to purchasers in the United States.
`
`
`
`(iii) Hormel
`
`21.
`
`Hormel Foods Corporation is a Delaware corporation headquartered in Austin,
`
`Minnesota. During the Relevant Period, Hormel Foods Corporation and/or its predecessors,
`
`wholly owned or controlled subsidiaries, or affiliates, including but not limited to Hormel Foods,
`
`LLC sold pork in interstate commerce, directly or through its wholly owned or controlled affiliates,
`
`to purchasers in the United States.
`
`
`
`(iv) JBS
`
`22.
`
`JBS USA Food Company is one of the world’s largest beef and pork processing
`
`companies and a wholly owned subsidiary of JBS USA Food Company Holdings, which holds a
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`78.5 percent controlling interest in Pilgrim’s Pride Corporation, one of the largest chicken-
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`producing companies in the world. JBS USA Food Company is a Delaware corporation,
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`headquartered in Greeley, Colorado. During the Relevant Period, JBS USA Food Company and/or
`
`its predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
`
`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United
`
`States.
`
`
`
`(v) Seaboard
`
`23.
`
`Seaboard Foods LLC is a limited-liability company headquartered in Shawnee
`
`Mission, Kansas, and is a wholly owned subsidiary of Seaboard Corporation. During the Relevant
`
`Period, Seaboard Foods LLC and/or its predecessors, wholly owned or controlled subsidiaries, or
`
`affiliates sold pork in interstate commerce, directly or through its wholly owned or controlled
`
`affiliates, to purchasers in the United States.
`
`
`
`(vi) Smithfield
`
`24.
`
`Smithfield Foods, Inc. is incorporated in the Commonwealth of Virginia, and an
`
`indirect wholly owned subsidiary of WH Group Limited, a Chinese company. Smithfield Foods
`
`is headquartered in Smithfield, Virginia. During the Relevant Period, Smithfield Foods, Inc.
`
`and/or its predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
`
`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United
`
`States.
`
`
`
`(vii) Triumph
`
`25.
`
`Triumph Foods, LLC is a limited-liability company headquartered in St. Joseph,
`
`Missouri. During the Relevant Period, Triumph Foods, LLC and/or its predecessors, wholly
`
`owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or through
`
`its wholly owned or controlled affiliates, to purchasers in the United States.
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`
`
`(viii) Tyson
`
`26.
`
`Tyson Foods, Inc. is a publicly traded Delaware corporation headquartered in
`
`Springdale, Arkansas. During the Relevant Period, Tyson Foods, Inc. and/or its predecessors,
`
`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or
`
`through its wholly owned or controlled affiliates, to purchasers in the United States.
`
`27.
`
`Tyson Prepared Foods, Inc. is a Delaware corporation headquartered in Springdale,
`
`Arkansas and is a wholly-owned subsidiary of Tyson Foods, Inc. During the Relevant Period,
`
`Tyson Prepared Foods, Inc. sold pork in interstate commerce, directly or through its wholly-owned
`
`or controlled affiliates, to purchasers in the United States.
`
`28.
`
`Tyson Fresh Meats, Inc. is a Delaware corporation headquartered in Springdale,
`
`Arkansas and is a wholly-owned subsidiary of Tyson Foods, Inc. During the Relevant Period,
`
`Tyson Fresh Meats, Inc. sold pork in interstate commerce, directly or through its wholly-owned or
`
`controlled affiliates, to purchasers in the United States.
`
`IV. FACTUAL ALLEGATIONS
`
`29.
`
`Starting in at least 2009 and continuing to the present, Defendants conspired to fix,
`
`raise, maintain and stabilize pork prices. To effectuate, maintain, and enforce their agreement, the
`
`pork integrator Defendants relied on a specialized industry data sharing service provided by Agri
`
`Stats, which served a critical role in Defendants’ price-fixing scheme. Through Agri Stats,
`
`Defendants shared and monitored critical and competitively sensitive business information
`
`regarding each other’s production metrics.
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`
`
`A.
`
`30.
`
`Agri Stats’ Central Role In Collusion In The Broiler Chicken Industry.
`
`Agri Stats has played a central role in collusion in other industries, including
`
`involvement in the Broiler chicken (“Broiler”) industry.53 As alleged in the In re Broiler Chicken
`
`Antitrust Litigation, No. 16-cv-08637 (N.D. Ill.) (“Broilers”), the defendant producers used Agri
`
`Stats as a part of their conspiracy to restrain production and inflate prices of Broilers.
`
`31.
`
`Specifically, Agri Stats collected and disseminated to the other members of the
`
`conspiracy disaggregated financial information (such as monthly operating profit, sales and cost
`
`per live pound), production volumes, capacity, slaughter information, inventory levels, and sales
`
`data for finished product form and type, amongst other pieces of competitively sensitive business
`
`information. The Agri Stats reports contain line-by-line entries for plants, lines, and yields of
`
`various Broiler facilities. Agri Stats relied upon (and the pork integrator Defendants agreed to) a
`
`detailed audit process to verify the accuracy of data from each Broiler producer’s facilities,
`
`sometimes directly contacting the Broiler producers to verify the data. Agri Stats also provided
`
`detailed price reports to the Broiler producers through its subsidiary, Express Markets, Inc., also
`
`known as EMI. Agri Stats collected data from the Broiler producers on a weekly basis and
`
`provided its reports to Broiler producers on a weekly and monthly basis.
`
`32.
`
`The detail of these reports ensured that Broiler producers could decode the
`
`information of their competitors. The Broiler complaints allege it was common knowledge that
`
`the detail of the Agri Stats reports allowed any reasonably informed producer to discern the identity
`
`of the competitors’ individual Broiler facilities. The Broiler reports, in parts, contained so few
`
`producers participating that the identities were obvious. Other reports contained such detailed data
`
`that it could be matched with the publicly stated aggregate data for larger Broiler defendants such
`
`
`3 “Broilers” are chickens raised to be slaughtered before the age of 13 weeks.
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`as Tyson. The complaints allege that Agri Stats purposefully circulated this information to top
`
`executives to facilitate agreement on supply, constraints, and price.
`
`33.
`
`In Broilers, plaintiffs also alleged that Agri Stats—known to its co-conspirators to
`
`be a willing and informed conduit for illicit information exchanges—used public and semi-public
`
`forums to convey messages to industry participants that furthered the purposes of the conspiracy
`
`by reassuring conspirators that production cuts would continue, and by inducing them to continue
`
`to act in concert to ensure they did. Agri Stats’ own statements in the Broiler industry facilitated
`
`the implementation of the agreement to restrict supply.
`
`34.
`
`In denying defendants’ motions to dismiss in the In re Broiler Chicken Antitrust
`
`Litigation, the district court noted that given the nature of the Agri Stats reports, the co-conspirators
`
`were sharing future anticipated production information with each other, which raises significant
`
`antitrust concerns.4
`
`B.
`
`
`
`Agri Stats Began Marketing Its Collusive Scheme To Pork Integrator
`Defendants.
`
`35.
`
`Beginning in at least 2008, Agri Stats began to propose a series of benchmarks to
`
`the pork integrator Defendants similar to the benchmarks used to restrain competition in the Broiler
`
`industry. Benchmarking is the act of comparing one company’s practices, methods or performance
`
`against those of other companies.5 Benchmarking of the type undertaken by Agri Stats and the
`
`other Defendants here reduces strategic uncertainty in the market and changes the incentives for
`
`competitors to compete, thereby enabling companies to coordinate their market strategies and
`
`
`4 In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 784 (N.D. Ill. 2017).
`
`5 Antitrust Issues Related to Benchmarking and Other Information Exchanges, Federal Trade
`available
`at
`Commission
`(May
`3,
`2011),
`https://www.ftc.gov/sites/default/files/documents/public_statements/antitrust-issuesrelated-
`benchmarking- and-other-information- exchanges/110503roschbenchmarking.pdf.
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`otherwise restrict competition. This is especially true where benchmarking involves the exchange
`
`of commercially sensitive, and typically proprietary, information among competitors.
`
`36.
`
`In 2008, Greg Bilbrey of Agri Stats wrote in the Advances in Pork Production
`
`Journal that benchmarking in the swine industry “could range from simple production
`
`comparisons to elaborate and sophisticated total production and financial comparisons. Each and
`
`every commercial swine operation is encouraged to participate in some benchmarking effort.”6
`
`37.
`
`Agri Stats emphasized to pork integrators that the goal of the agreement to share
`
`information was profitability, not production, and invited them again to participate in the
`
`benchmarking. Agri Stats emphasized that “We must remember that the ultimate goal is
`
`increasing profitability—not always increasing the level of production.” Agri Stats told the
`
`industry that “[e]ach swine production company should be participating in some type of
`
`benchmarking. To gain maximum benefit, production, cost and financial performance should
`
`all be part of the benchmarking program.”7
`
`38.
`
`In April 2009, Agri Stats again invited pork producers to design and operate their
`
`own benchmarking effort: “Though all producers may not be part of or fit into an Agri Stats type
`
`benchmarking program, all producers could participate in benchmarking in some way.
`
`Commercial benchmarking opportunities are available. Producer groups could design and
`
`operate their own benchmarking effort.”8
`
`
`6 Greg Bilbrey, Benchmarking and Cost-Production Relationships, 19 Advances in Pork
`Production Journal, 43 (2008) (emphasis added).
`
`7 Id. at 46 (emphasis added).
`
`8 Greg Bilbrey, Benchmarking and Tools to Maximize Profit, London Swine Conference – Tools
`of the Trade (April 1-2, 2009).
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`39.
`
`Defendants accepted this invitation and, beginning no later than 2009, created the
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`detailed benchmarking scheme based upon and found in the Agri Stats reports. Their agreement
`
`was to use the exchanged benchmarking information to coordinate supply and stabilize, as well as
`
`increase, prices of pork sold in the United States, to provide and receive information from Agri
`
`Stats, and to use this detailed sensitive information for the purposes of monitoring each other’s
`
`production and pricing. The agreement was successful as pork prices rose significantly after the
`
`agreement was reached.
`
`40.
`
`Each pork integrator Defendant identified specific executives that were responsible
`
`for transmitting data to and from Agri Stats relating to pork pricing, supply, slaughter, inventory,
`
`export, or production levels.
`
`• Clemens: Joshua Rennels (Treasurer, Clemens Food Group)
`
`• Hormel: Paul Bogle (Director, Cost Accounting)
`
`• JBS: Garry Albright (Head of Business Analysis), Kevin Arnold (Head of
`Finance), Jamie Fosbery (Analyst), Raven Goodlow (Business Analyst),
`Robbie Kearns (Business Analyst), Lisa Peters (Business Analyst), Eli Zoske
`(Cost Accountant)
`
`• Seaboard: Damon Ginther (Senior Director of Business Data & Analytics), Mel
`Davis (Vice President of Hog Procurement and Bio-Energy, Tom Dye
`(Operations Controller)
`
`• Smithfield: Aimee Ward (Director, Hog Finance), Kent Hilbrands (Sr. Director,
`Operations Finance), Elizabeth Barger (Data Analyst)
`
`• Triumph: Matt England (Chief Integrated Business Strategy Officer), Ken
`Grannas (Director Inventory/Reporting), Tom French (Director, Margin
`Management), Joe Diebold (Chief Financial Officer), Dan Marlow (Corporate
`Controller)
`
`• Tyson: Deb McConnell (Division Controller)
`
`
`
`- 12 -
`
`

`

`Case 3:21-cv-00798-GLS-ML Document 1 Filed 07/13/21 Page 16 of 80
`
`C.
`
`
`41.
`
`Agri Stats Allowed Pork Integrators To Monitor Each Other’s Pricing And
`Production, And To Discipline Co-Conspirators For Not Complying With The
`Collusive Agreement.
`
`Agri Stats provided pork integrators with an unparalleled ability to share
`
`proprietary information concerning key business metrics, such as production levels and short and
`
`long-term production capacity. Agri Stats was key to the formation, operation, and continuing
`
`stability of the Defendants’ anticompetitive scheme. To effectuate their agreement, the
`
`participants had to have confidence that each member was following through with the agreement
`
`by limiting their production and stabilizing prices. Agri Stats served that function.
`
`42.
`
`Defendants Clemens, Hormel, JBS, Seaboard, Smithfield, Triumph, and Tyson,
`
`were all Agri Stats subscribers and reported a wide variety of information to Agri Stats. Agri
`
`Stats’ former parent company, Eli Lilly, stated during a 2016 earnings call that “over 90% of the
`
`poultry and pig market” uses Agri Stats in the United States.9
`
`43.
`
`Agri Stats collects commercially sensitive financial and production data
`
`electronically each month from each pork integrator Defendant. Internal auditors convert the data,
`
`prepare it for comparison, and perform the monthly audits. Each company’s financial data is
`
`reconciled to their general ledger to help ensure actual costs are reported. Raw numbers are used
`
`in Agri Stats’ standardized calculations so all company numbers are calculated the same way.10
`
`44.
`
`Unlike traditional “benchmark” services which rely upon unaudited and aggregated
`
`publicly available data, Agri Stats obtains audited data directly from the participating producers.
`
`When a producer joins Agri Stats, Agri Stats employees help the producer learn, set up, audit, and
`
`
`9 Transcript, Eli Lilly and Co. at Morgan Stanley Global Healthcare Conference (Sep. 13, 2016)
`(emphasis added).
`
`10 Greg Bilbrey, Implementing Simple and Useful Production Benchmarking, London Swine
`Conference — A Time for Change (Mar. 28-29, 2012).
`
`
`
`- 13 -
`
`

`

`Case 3:21-cv-00798-GLS-ML Document 1 Filed 07/13/21 Page 17 of 80
`
`prepare the producer to submit its data each month. When the producer submits its data to Agri
`
`Stats, Agri Stats then enters the data into its system and ensures that the data is in a format that
`
`allows participants to make “apples to apples” comparisons with competitors.
`
`45.
`
`The pork integrator Defendants received monthly detailed reports and graphs
`
`allowing them to compare their performance and costs to other participants, the average of all
`
`companies, the top 25 percent and the top five companies. Current month, previous quarter and
`
`previous twelve-month periods are reported. As of 2009, each monthly report contained nine
`
`sections for analysis and comparison: Performance Summary, Feed Mill, Ingredient Purchasing,
`
`Weaned Pig Production, Nursery, Finishing, Wean-to-Finish, Market Haul, Profit and Sales.11
`
`Participants may also receive an abbreviated Key Performance Indicator report, as well as
`
`historical graphs.12
`
`46.
`
`Due to the nature of a hog’s life and production cycle, even current and historical
`
`information regarding hog production provides forward-looking supply
`
`information
`
`to
`
`competitors. The typical hog production cycle , which is largely a function of the hog biological
`
`cycle, lasts about four years. Given the length of time needed to breed an existing sow, choose
`
`and retain offspring for breeding, and breed and rear the resulting crop of piglets, it takes nearly
`
`two years to substantially increase production.
`
`47.
`
`On information and belief, one presentation from Agri Stats shows the level of
`
`detail provided to Defendants regarding profits in the pork market:13
`
`
`11 Greg Bilbrey, Benchmarking and Tools to Maximize Profit, supra note 8.
`
`12 Greg Bilbrey, Benchmarking and Cost-Production Relationships, supra note 6.
`
`13 Greg Bi

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