Is Obama Putting the ‘Anti’ Back Into Antitrust?

During the George Bush years, the federal government backed off enforcement of antitrust laws. The Obama Administration says it is reversing those policies, beginning with the business of agriculture.

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ST. LOUIS — The room was filled. There were Nebraska hog raisers, corn farmers from Missouri, Colorado feed lot owners and ranchers from Wyoming. They were Republicans and Democrats, pro-life and pro-choice, church-goers and agnostics. The one thing they had in common is a belief that the markets for food and agriculture are dominated by a few big companies and, as a result, the prices paid to farmers and charged to consumers aren’t fair.

The members of the Organization for Competitive Markets have been denouncing big business for years. OCM has issued press releases and joined lawsuits. Their annual meetings have been small, however, and the organization’s influence has been weak. OCM has had few successes convincing a largely uninterested federal government aggressively to enforce antitrust laws and the rules governing market concentration in the livestock business.

Those times may be changing. “This is a narrow moment in history when a difference can be made,” Omaha, Nebraska, attorney David Domina said near the end of OCM’s annual meeting, held this year in St. Louis.

This moment arrived with last November’s election. The Department of Justice under President George Bush was slow to prosecute under long-standing antitrust laws. The Obama Administration, however, has promised stricter interpretation of those statutes. And the Democrats have shown a particular interest in competition (or the lack of it) in agriculture markets.

The Department of Justice and the Department of Agriculture announced last week that they will hold “workshops” to “openly discuss legal and economic issues associated with competition in the agriculture industry,” said Christine Varney, the Assistant Attorney General in charge of antitrust issues at Justice. And two top Obama Administration officials charged with enforcing antitrust and competition laws in the agriculture and livestock sectors came to speak to the farmers and ranchers at the OCM annual meeting.

The workshops will begin in January. These will be evidence gathering sessions for a government investigating ways that competition is currently restricted, from the sale of seed to the ownership and control over grocery-store shelves. Both DOJ and USDA officials said they are eager to receive comments on agriculture markets across the country, including anonymous statements. To find more information on these workshops and see where to send your comments, look here

The Obama Administration appears to be looking at four areas in the agriculture markets:

Bill Bishop/Daily Yonder
Top Obama Administration antitrust lawyer Philip Weiser gave his first public speech to the meeting of the Organization for Competitive Markets, saying the Department of Justice would pay particular attention to the agriculture business. To the right is attorney David Balto with the Center for American Progress and OCM.

Dairy  Last week, Vermont Sen. Bernie Sanders wrote to the Department of Justice asking that it investigate major milk buyers to see if they violate antitrust laws.

Seeds  That is, Monsanto. Monsanto now controls almost all the genetically modified soy, cotton and corn seed. Philip Weiser, the new Deputy Assistant Attorney General who spoke at the OCM conference, said the Justice Department would be taking a hard look at market concentration in the seed industry. “For many farmers and consumer advocates, we understand that there are concerns regarding the levels of concentration in the seed industry–particularly for corn and soybeans,” Weiser said. (A copy of Weiser’s speech can be found here.) 

That is an understatement. Farmers across the Midwest have been meeting to protest Monsanto’s control of the seed market. OCM attorney David Balto reminded Weiser that Democrats in the Clinton Administration filed an antitrust action against Microsoft, the software maker. “Back then, you started off suing Microsoft,” Balto said. “That’s a nice letter to begin with.”

Surely it wasn’t lost on St. Louis-based Monsanto that Weiser came to its hometown to give his first public speech after joining the Obama Administration — and that his speech was in part about the seed business.

Bill Bishop/Daily Yonder
Dudley Butler, administrator for USDA’s Grain Inspection, Packers & Stockyards Administration, asked farmers and ranchers to bring him their stories of anti-competitive practices.

Livestock  Dudley Butler, administrator for USDA’s Grain Inspection, Packers & Stockyards Administration, told the OCM meeting that he planned to “get out in the countryside. We know we have an imbalance of power in some of the industries now.”

Livestock raisers have been fighting consolidation among packing firms. Weiser said specifically that the Department of Justice was “interested in learning whether the controls of the (Packers and Stockyards Act of 1921) are relevant to the way businesses are run today and whether the law is being implemented effectively to promote competition.”

Butler gave a populist-tinged speech that sat well with the latter-day populists in the crowd. Asking for comments from farm producers who are often afraid to cross their buyers and suppliers, Butler said, “I understand the concept of retaliation.”

Food Costs The DOJ says it will investigate whether the vertical integration of the food business — where the same company can control a product from seed genetics to the grocery shelves — violates antitrust rules.  

“We recognize this is a very important sector,” Weiser said of the department’s interest in agriculture. He said antitrust chief Christine Varney “has put a huge emphasis on” the ag sector and has set no preconditions on the inquiry. “We can say we’re really committed to learning and hearing from as many people as we can,” Weiser said, adding, “I can’t go much deeper.”

If the OCM conference was any indication, the USDA and DOJ are likely to get an earful when they begin their workshops. Jim Foster, a Missouri hog raiser for more than five decades, told the conference that the big meat packers had gained control of so many animals that they could do without the independent producers. “They own enough hogs that they don’t need us,” Foster said.

An Indiana seed dealer grew so disturbed by the prices Monsanto charged to farmers growing in different parts of his service area that he simply stopped selling the company’s seed.

The stories are all the same — as competition declines, farmers and ranchers have fewer choices about where to sell their crops or cattle or where to buy their seed. As competition declines, farmers are finding their prices decline and their costs increase.

The farmers and ranchers at the OCM meeting represent an older style of politics and economics. (Long before Monsanto developed into a seed-selling giant, George Washington said, “It is miserable for a farmer to be obliged to buy his seed….”) While some economists now argue that monopolies may be a product of efficient markets, David Domina reminded the ranchers and farmers at the OCM conference that having just a few corporations dominate markets is probably not good for the country. “You can’t combine a field using a machine with just three moving parts,” the Omaha attorney said. “You need thousands.” 

The farmers and ranchers who met in St. Louis are anxious to see if the federal government and courts agree.

 

 

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