Opinion ID: 775962
Heading Depth: 2
Heading Rank: 5

Heading: The Nature of the Information Exchanged

Text: 55 Alongside the structure of the industry involved, the other major factor for courts to consider in a data exchange case is the nature of the information exchanged. Gypsum, 438 U.S. at 441 n.16. There are certain well-established criteria used to help ascertain the anticompetitive potential of information exchanges. As part of the analysis, a court should consider, broadly speaking, whether it was of the sort in American Column & Lumber Co. v. United States... or of that in Maple Flooring Manufacturers Ass'n v. United States. Battipaglia, 745 F.2d at 175 (citations omitted). Applying the relevant criteria reveals anticompetitive potential in this case. 56 The first factor to consider is the time frame of the data. The Supreme Court has made clear that [e]xchanges of current price information, of course, have the greatest potential for generating anti- competitive effects and although not per se unlawful have consistently been held to violate the Sherman Act. Gypsum, 438 U.S. at 441 n.16 (citing Am. Column & Lumber; Am. Linseed Oil Co.; and Container Corp.). The exchange of past price data is greatly preferred because current data have greater potential to affect future prices and facilitate price conspiracies. By the same reasoning, exchanges of future price information are considered especially anticompetitive. 57 See, e.g., Am. Column & Lumber, 257 U.S. at 398-99. 58 Plaintiff's complaint alleges that defendants exchanged past and current salary information, as well as future salary budget information. It claims that there has been an: 59 exchange among Defendants of massive amounts of extremely detailed information concerning job classifications, salaries, bonuses, and benefits paid, or to be paid, to categories of employees within the different job classifications; starting salaries of new employees; signing bonuses; relocation expenses, stock options; and related information.... Updated information on salaries is exchanged in oral and written communications throughout the year. 60 Compl. ¶ 2. Most prominently, the Job Family Survey coordinated by Exxon gathered information regarding the salaries paid for specific types of work to employees with particular experience levels and academic backgrounds. Id. ¶¶ 69-75. This survey sought and obtained current data on the actual compensation paid by defendants to employees in various `job families.' The information gathered was distributed to the survey participants several times a year. Todd, 126 F. Supp. 2d at 323 n.5. Meanwhile, the Starting Salary Survey gathered information from the Six Majors measuring starting salaries of college graduates entering MPT positions. Compl. ¶¶ 84-85. Defendants also attended meetings at least three times per year at which various types of salary information were discussed. Id. ¶ 87. Among the information exchanged at these meetings [were] current and future increases in Defendants' salary budgets. Id. ¶ 88. 13 61 In addition to the time frame, another factor courts look to is the specificity of the information. Price exchanges that identify particular parties, transactions, and prices are seen as potentially anticompetitive because they may be used to police a secret or tacit conspiracy to stabilize prices. See, e.g., Container Corp., 393 U.S. at 334-38. Courts prefer that information be aggregated in the form of industry averages, thus avoiding transactional specificity. Compare Maple Flooring, 268 U.S. at 573-74 (statistical reports of average prices found lawful), with Am. Column & Lumber, 257 U.S. at 410 (violation found where exchanged information provided specific details of transactions). 62 Two aspects of the information exchange at issue are problematic in this regard. First, although the salary information was aggregated and distributed by a third-party consulting firm, companies participating in the Job Family Survey received compensation data broken down to subsets consisting of as few as three competitors. Compl. ¶ 70. Plaintiff alleges that these periodically updated data sets were used by each defendant to determine whether the announced budgets of its competitors had in fact been implemented so that each could consider what adjustments should be made to coordinate salaries. Id. ¶ 76. This practice, plaintiff argues on appeal, made deviations from previously announced salary levels easily and quickly detectable. Second, at their meetings defendants discussed current and future salary budgets, including company-specific information, such that all participants learn where each other participant is going with its salary budget for the upcoming year or, if a participant's salary year had only recently begun, for that new year. Id. ¶ 88. 63 Another important factor to consider in evaluating an information exchange is whether the data are made publicly available. Public dissemination is a primary way for data exchange to realize its procompetitive potential. For example, in the traditional oligopoly (seller-side) context, access to information may better equip buyers to compare products, rendering the market more efficient while diminishing the anticompetitive effects of the exchange. See Clark, supra, at 903. A court is therefore more likely to approve a data exchange where the information is made public. See, e.g., Maple Flooring, 268 U.S. at 573- 74 (finding no violation where exchanged information was widely disseminated to the public); Sugar Inst., 297 U.S. at 604-05 (affirming district court's remedial decree requiring public dissemination of the information gathered); Wilcox v. First Interstate Bank of Or., 815 F.2d 522, 526 (9th Cir. 1987) (finding no violation and distinguishing Container Corp. on the basis that the information dissemination was public). 64 In the instant case, dissemination of the information to the employees could have helped mitigate any anticompetitive effects of the exchange and possibly enhanced market efficiency by making employees more sensitive to salary increases. No such dissemination occurred, however. The information was not disclosed to the public nor to the employees whose salaries were the subject of the exchange. Compl. ¶¶ 3, 90. Plaintiff alleges that [t]he confidential treatment of the information exchanged impedes the ability of employees to bargain intelligently and competitively with the members of the information exchange. Id. ¶ 3. 65 A final troubling aspect of the arrangement at issue is the fact that the defendants allegedly participated in frequent meetings to discuss the salary information, id. ¶ 87, accompanied by assurances that the participants would primarily use the exchanged data in setting their MPT salaries, id. ¶ 106. Meetings, of course, are not inherently unlawful but in this context they have the potential to enhance the anticompetitive effects and likelihood of... uniformity caused by information exchange. VI Areeda, supra, ¶ 1435b, at 224; see also, e.g., Am. Column & Lumber, 257 U.S. at 396-97, 411-12 (finding violation where defendants held frequent meetings where potentially anticompetitive information was discussed). Meanwhile, the frequency of the meetings is itself problematic for the same reason that the exchange of current price data is suspect: It tends to facilitate the policing of price conspiracies. 66 In sum, the nature of the information exchanged weighs against the motion to dismiss. The characteristics of the data exchange in this case are precisely those that arouse suspicion of anticompetitive activity under the rule of reason. 67