In May 2012, the U.S. Department of Justice, Antitrust Division (DOJ), issued a report concerning five joint public workshops it conducted with the U.S. Department of Agriculture (USDA) to consider competition issues affecting the agricultural industry and the appropriate role for antitrust and regulatory enforcement in that industry. Each workshop addressed particular antitrust trends and issues affecting specific agricultural sectors and actors, and involved highranking officials including U.S. Attorney General Eric Holder, U.S. Secretary of Agriculture Tom Vilsack, state officials, as well as independent farmers and producers. The DOJ stated that the goals of the workshops were to "promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues as well as, to listen to and learn from parties with real-world experience in the agricultural sector." At the conclusion of the workshops, the DOJ stated that it "remains committed to taking all appropriate investigatory and enforcement action against conduct threatening harm to competition in agricultural markets."1
The joint public workshops marked an unprecedented collaboration between the DOJ and USDA.2 The workshops addressed several themes including: (1) the dynamics of competition in agricultural markets, (2) buyer power (monopsony), and (3) vertical integration. The workshops also provided an opportunity for farmers, ranchers, croppers, consumer groups, processors, agribusiness, and other stakeholders to provide examples of alleged anticompetitive conduct, such as bid rigging (e.g., buyers of agricultural commodities agreeing to limit competition between themselves by agreeing on prices to offer or rotating bids), manipulative pricing, high market concentration, and other behavior, as well as to suggest methods to combat and prevent such behavior.
The DOJ reports that it took "particular interest" in public comments regarding mergers among suppliers and retailers, including criticisms that weak merger enforcement in the agriculture sector in recent decades has allegedly contributed to high input prices, low commodity prices, and other harms.3 Dairy producers in particular contrasted today's more concentrated markets with the more atomized markets of past years, recalling times when they had plentiful trading partners. The DOJ defends its merger enforcement record in its report, pointing to its recent challenges to mergers and acquisitions involving Dean Foods, George's Foods, and National Beef, and emphasizes that some of the concerns expressed at the workshops about merger activity focused on policy goals outside the traditional, competition-focused concerns of antitrust law, such as enhancing food safety or protecting local economies from competitive pressures.4 Remarking in the report that its enforcement authority is limited to addressing specific anti-competitive acts, the DOJ states that it has no power to break up existing market participants based only on a desire to reduce concentration or otherwise "engineer an optimal market structure."5
Some workshop participants pointed to retail concentration as a special area of concern, "charging that retailers are extracting a greater and greater share of the consumer food dollar, leaving producers with an ever decreasing share, and at the same time imposing price increases on consumers."6 Producers in the beef and pork sectors in particular registered complaints that, in many regions, increasing concentration among suppliers, service providers, and buyers/retailers have squeezed margins for producers and growers. The DOJ observes, however, that not all participants agreed that retail concentration is either excessive or unjustified; producers in some regions reported adequate competition among commodity buyers and efficiency gains resulting from economies of scale in processing and retail.
The DOJ also reports that producers in several industries complained of "increasing difficulty" in "obtaining timely and accurate" price information, suggesting that shortcomings in available data reduces producer bargaining power and leaves markets vulnerable to price manipulation.7 The DOJ, however, notes that price transparency can be pro-competitive or anti-competitive depending on the circumstances, and for that reason, it is typically the "province of regulation rather than antitrust enforcement."8 Dairy and beef producers also expressed suspicions that processors and packers use surplus product and large committed supplies to manipulate spot markets, or that price reporting is being manipulated to influence the economics of prevailing-price contracts. In response, the DOJ noted that although it prosecutes concerted bid-rigging activity under antitrust law, the DOJ would ordinarily defer to other agencies, such as the USDA and CFTC, with respect to alleged market manipulation by firms acting independently from one another.9
When the DOJ and USDA announced their plan to hold the joint workshops on competition issues facing agriculture they issued a call for public comments and reactions
regarding those issues. Farmers, ranchers, consumers, academics, government officials, industry organizations, and other interested parties submitted over 18,000 comments.10 Members of Congress, governors, state attorneys general, state secretaries of agriculture, the Commodity Futures Trading Commission, the Federal Trade Commission, and other federal and state governmental actors also contributed to the workshops.
The DOJ and USDA stated prior to the workshops' commencement that "a healthy, competitive agricultural sector is vitally important to our nation's economy as well as a matter of national security and public health." After the workshops, the DOJ reaffirmed that position, even while acknowledging that it has only a "limited" ability to address competition problems in agriculture through antitrust enforcement. While the DOJ concluded that antitrust laws do not empower courts to produce an ideal economic landscape of small farms and ranches, control price volatility resulting from legitimate competitive market forces, or promote foreign trade,11 the DOJ expressed agreement with those workshop participants who argued that the DOJ could play a role in supporting regulatory policy-makers by advocating for the importance of competition. The DOJ stated that in future enforcement efforts it would draw on some of the new relationships fostered during the workshops with the agricultural sector, USDA, and state officials.12 Finally, the DOJ claims that, as a result of the workshops, it has "redoubled its efforts" to prevent anticompetitive agricultural mergers and conduct.13
Footnotes
1 U.S. Department of Justice, Competition and Agriculture: Voices from the Workshops on Agriculture and Antitrust Enforcement in our 21st Century Economy and Thoughts on the Way Forward, www.justice.gov/atr/public/reports/283291.pdf (issued May 2012) at 2.
2 Id. at 3.
3 Id. at 5.
4 Id. at 17.
5 Id. at 18.
6 Id. at 7.
7 Id. at 11.
8 Id. at 21.
9 Id. at 22.
10 Comments can be accessed on the DOJ's website at www.justice.gov/atr/public/workshops/ag2010/all-comments-num.html. Transcripts of the sessions are also available on the website.
11 Competition and Agriculture at 3.
12 Id.
13 Id. at 16.
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