Agristats and possible chicken supply coordination

An article in Bloombergbusinessweek (February 15,2017) titled “Is the Chicken Industry Rigged” describes the increasing profits for chicken manufacturers and a lawsuit about possible coordination. The industry participants subscribe to an information sharing service, Agristats, owned by Eli Lilly, that provides data across the industry regarding individual plant details. The claim in the lawsuit is that such knowledge enables competitors to understand production rampup plans of each other, and thus coordinate actions without meeting. The class action lawsuit claims a resulting increase in prices from what they may have been. How much detail should the trade be permitted to share with each other to improve efficiency while not enabling collusion ? Should rational decisions from such shared data that improve profits be considered unacceptable or are they a portion of the efficiency benefits shared by the industry ? if, as the industry claims, prices went down during this period, is that evidence that such collusion did not take place ? Could prices have not gone down as much as feasible because of implicit coordination ?

About aviyer2010

This entry was posted in Capacity, Collaboration, competitiveness, consumer, Cost, Liability, Operations Management, ordering, productivity and tagged , , , , , . Bookmark the permalink.

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