Eerie Exchanges? US Antitrust Agencies Renew Focus on Information Exchange Practices
U.S. antitrust enforcers at the Department of Justice and the Federal Trade Commission have been focused on expanding their focus on information sharing practices in recent enforcement and policy statements. Most recently, the DOJ laid out its views in a Statement of Interest supporting private plaintiffs in a case targeting information sharing in pork production, where the DOJ itself has been active.
Through these policy initiatives, the Agencies have gradually walked back long-established guidance on safeguards on sharing information without raising concerns. While information sharing has primarily been used as evidence of anticompetitive agreements in the US, the DOJ through recent enforcement has also pushed to expand the law on standalone theories of harm. In doing so, they are increasingly focused on the roles of data vendors, software providers, and consultants who serve as middlemen in aggregating and sharing data among competitors.
While the general principles remain in line with established guidance, certain information sharing activities among competitors through third parties or new technologies raise the specter of heightened antitrust risk. Read on for more on this chilling development in our third annual Halloween feature!
Safe harbors are a ghost of the past
In 2023, the Agencies rescinded three policy statements that established an antitrust “safety zone” for information sharing. Information sharing would typically fall within this safety zone if the exchange (1) was managed by an independent thirty-party, (2) involved historical information more than 3 months old, and (3) included data from at least 5 participants, with no single provider’s data contributes more than 25% of the “weight” of any statistic shared, and the shared statistics were sufficiently aggregated. Although the now-withdrawn policy statements pertained specifically to health care, they were widely relied upon across a range of industries.
The DOJ called the statements “outdated” and “overly permissive” and indicated that going forward, enforcement actions would provide guidance to the public. The FTC echoed this messaging, saying the guidance “no longer reflect[ed] market realities.” These positions reflect DOJ’s view that technological advances have “enabled information sharing to take a more dangerous form than in the past, as greater amounts of information are exchanged more quickly, more frequently, and with increasing granularity.” Both Agencies emphasized their intent to consider information sharing on a “case-by-case” basis, giving rise to a state of uncertainty and signaling the potential for greater scrutiny.
Standalone enforcement focuses on middlemen and new technologies
Unlike in other jurisdictions, information sharing has not been sufficient to establish a per se antitrust violation in the US because it does not fall within a traditional cartel agreement. However, the DOJ is staking out its position in the statement of interest that information sharing can constitute an “agreement” sufficient to support a standalone civil antitrust violation. Relying on a rule of reason assessment, the DOJ takes the position that the exchange is unreasonable where it “tends to harm competition” by chilling competition or distorting the competitive process irrespective of the format of the data.
Since the withdrawal, DOJ has followed through on initiating enforcement in this area. In September 2023, DOJ brought a civil suit against Agri Stats Inc. alleging that Agri Stats had violated the antitrust laws by collecting, integrating and distributing “loosely anonymized” reports containing competitively sensitive information (“CSI”) related to detailed, forward-looking price, cost, and output among competing meat processors without sharing with the broader market.
In August 2024, DOJ brought another civil suit against RealPage Inc. suggesting (among other allegations) that its broker pricing software violated the antitrust laws based on its use for sharing CSI on multifamily apartment rentals. The complaint alleges that RealPage’s pricing software uses detailed, non-public information from participating landlords on current rental rates and other lease terms to generate recommendations that tend to inflate the market. Notably, the DOJ stepped back from earlier suggestions in policy statements that this use of common pricing software should itself be a per se violation of the antitrust laws.
The basic principles on information sharing survive, but with new traps
While the safe harbors no longer survive, the same general principles continue to guide companies on information exchange activities. The DOJ’s statement of interest focuses on some of the same features outlined in earlier guidance in assessing whether exchange of information tends to reduce competition.
- Sensitivity. DOJ continues to highlight price, output, and cost information as more sensitive, while at the same time indicating that “not every case requires a direct exchange of price or cost.”
- Granularity. Information-sharing arrangements are more likely to harm competition when information is detailed or non-aggregated, but “there is no categorical rule: Courts do not require detailed or non-aggregated information if other circumstances indicate a tendency for anticompetitive harm.” This ties into both the granularity of the product/service reporting as well as how many participants’ data the output is based on.
- Public availability. According to DOJ, “[w]hen competitors agree to exchange competitively sensitive information only among each other, it suggests that the information sharing will benefit only the competitors at the expense of consumers, workers, or other market participants.”
- Contemporariness. Exchanges of recent or future information carry far greater potential for anticompetitive effects than historical data. Both the RealPage and Agri Stats cases allege conduct related to forward-looking data, highlighting the risks of sharing competitively sensitive information that provides insights into current and future pricing strategies.
While similar principles apply, relying on third parties and aggregation across a set number of competitors will not protect against scrutiny. Indeed, middlemen who support potentially procompetitive activities will need to more carefully consider their potential exposure. And industry-wide initiatives even in less consolidated industries could attract more scrutiny, particularly where the information is not made publicly available.
New approach may have chilling consequences
This new approach means there are many more factors to assess and weigh than was previously the case. For the many companies that rely on third party reporting services and pricing software to inform their strategic and tactical decision-making processes, the Agencies’ retraction of the pre-existing safe harbor continues to create uncertainty.
Although the DOJ is seeking to providing guidance through its enforcement activity, it is not yet apparent whether U.S. courts will endorse the approach or where they will delineate between permissible and impermissible information exchanges.
