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Potatoes are awesome. Big Potato, not so much. In the United States, it faces lawsuits over price fixing.

The history of the potato is fascinating. First domesticated 8,000 years ago in the Andes, the world now produces about 375 million metric tons globally.

They come in all shapes and sizes, with some 5,000 varieties known to exist. If you visit Peru, the 12,000-hectare Potato Park (“Parque de la Papa” in Spanish) is located in the mountains near the southern city of Cusco. The park was established to conserve the rich potato biodiversity of the Andean highlands and preserve indigenous knowledge of that diversity. They collaborate with research institutions to share genetic knowledge and develop climate-resistant potato varieties, while prohibiting the patenting of genetic resources.

Farmers sharing potatoes in the Potato Park, Peru.
Farmers sharing potatoes in the Potato Park, Peru. IIED on Flickr

The potato’s spread into Europe in the 1600s is interesting on its own. Europeans were suspicious of this new world tuber. They weren’t mentioned in the Bible and some referred to them as the “Devil’s Apple”. They were associated with demons and other things that get spooky at night. When finally adopted into European diets, the upper classes scoffed. Since they grew in the dirt, they were considered food for the poor.

But this isn’t about all that. This is about Big Potato. Specifically, how America’s potato cartel colludes to keep prices high.

As we learn from The Lever, four companies now control 97% of the US $68 billion frozen potato market. Somehow, who knows ¯_(ツ)_/¯, prices for potatoes from these four companies rose 47 percent in lockstep between 2022 and 2024.

The firms “have never ever seen margins this high in the history of the potato industry,” said an executive from one of the companies in an investor call.

Late last fall, the four companies were hit with several antitrust lawsuits that accuse them of conspiring “to artificially fix the prices of their spuds by sharing trade information and coordinating price raises beginning in 2021,” according to The Washington Post.

The collusion isn’t happening in secret deals. Instead, like other industries, these companies leverage tech platforms to, essentially, do the colluding for them.

Via The Lever:

In the popular imagination, price-fixing agreements might be struck at a secret meeting of rival executives — the deal made in the classic “smoke-filled room.” But the case against Big Potato argues that the frozen potato companies have accomplished such a tacit agreement through other means: a third-party tech platform.

From meatpacking to real estate, antitrust enforcers have begun to take a closer look at information-sharing platforms, software used within industries to share business information between rival companies. Regulators argue that such tech platforms allow companies to tacitly fix prices by swapping detailed and often confidential information on their operating costs and pricing.

We see this happening all over the place. See, Three Algorithms in the Room where we learn about the growing number of industries using software to price fix. Or read about how the Department of Justice is siding with tenants that accuse a tech company’s real estate platform of helping landlords collude against them.

Regulators argue that such tech platforms allow companies to tacitly fix prices by swapping detailed and often confidential information on their operating costs and pricing. Here’s one on sugar. Here’s one on meat.

Again, from The Lever:

“It’s unnecessary to actually have everybody get together and agree on prices, because that’s a felony, and you can go to prison, and they know that,” said Peter Carstensen, a professor emeritus at the University of Wisconsin Law School and a senior fellow at the American Antitrust Institute. “So they’re not going to do that if they’ve got another means of accomplishing the same end.”

For the frozen potato companies, the smoke-filled room is called PotatoTrac, an analytics service sold by a third-party company called Circana. The four major frozen potato companies all agree to feed data into PotatoTrac, which the service then distributes to the market, giving executives an in-depth look at supply, labor costs, and pricing.

“Using this aggregated pricing data, the Defendants have been able to coordinate prices… to artificially inflate the price of [frozen potatoes] by ensuring that no price competition takes place,” one lawsuit argues.

Like elsewhere, technology is used to create “efficiencies”. In this case, market negotiations that end up with collusion.

But, the defendants hope, it absolves people of responsibility. They’re just following the algorithm’s recommendations as you, and we, are left with the consequences.

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