JULY - SEPTEMBER 20189cXo insightsFood and Beverage's Big Data Surprise: Antitrust rules Still Applyig data seems poised to a make paradigm-shifting change to the food and beverage industry-- and CPG as a whole. Big data gives business in this deeply consumer- connected space a whole new level of access and insight. Now, both manufacturers and retailers in the sector can review a real-time ocean of transactional and behavioral data on all aspects of consumer purchases, preferences, and behavior patterns. And, perhaps more importantly, big data's new analytic tools let food and beverage businesses discern and predict consumer behavior and outcomes-- enabling marketing, pricing, and competitive positioning optimization. In particular, food and beverage and other retailers have, and will continue to, turn to the extraordinary, real-time insights into competitors' prices that big data can offer. Big data price intelligence frameworks allow retailers to monitor rivals' pricing strategies and, if needed, recalibrate their own. The information gained from price intelligence analytics should increase competition. But, paradoxically, the manner by which businesses gain access to the underlying data may be considered anticompetitive in some circumstances. Specifically, pricing data gathered or disseminated through data exchanges or trade associations can be problematic without the proper safeguards. The reason? No matter how new the technology, competitors who share pricing information often create antitrust concerns. To avoid antitrust issues when using price intelligence analytics, food and beverage companies can turn to guidelines issued by the Federal Trade Commission ("FTC") and Department of Justice ("DOJ") (together, the "Agencies"). These guidelines address how and when competitors can collaborate and can inform companies on how to share pricing data without running afoul of the antitrust laws. Price Intelligence at Work Big data will have big reach into food and beverage pricing. Many of the price intelligence tools big data offers provide ongoing and sometime automatic price recalibration. That kind of on-point pricing information for today's more fully wired consumer can end up influencing critical purchase and point of purchase decisions--contributing to today's ultracompetitive marketplace. For example price intelligence provider 360pi analyzed its data to determine how Amazon.com competes for consumer sales against large retailers such as Target, Sears, and Costco, in a recent article 360pi found that Amazon successfully engaged in dynamic pricing by being the fastest follower of the price leader--when a retailer dropped its price, Amazon quickly followed suit. A retailer without this knowledge might accidentally start a "race to the bottom" against Amazon, not realizing the better price strategy would be to offer a competitive price, but not necessarily the lowest price. New Tech and Old Rules: Price Intelligence and the Antitrust LawsThe DOJ and FTC know that procompetitive effects and economic efficiencies can occur when competitors share information. When it comes to pricing decisions based upon price intelligence, most decisions will likely have a procompetitive effect because consumers will end up paying a lower price. Nonetheless, if the underlying data is provided by, or shared with, competitors, antitrust concerns can arise--especially for pricing, cost, output or future-plans data. This kind of competitively sensitive information tends to facilitate potentially problematic price coordination among competitors. According to the FTC, competitors' data exchange or statistical reporting can raise antitrust concerns BSTEVE SAFRANSKI, PARTNER AND ELIZABETH FRIEDMAN, ASSOCIATE, ROBINS, KAPLAN, MILLER & CIRESI L.L.P. Steve Safranski
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