× Close Become a Member


Media Releases, Legislative News, Agricultural Updates


Legislative war declared on concentration

By Melissa Elliott

Merger mania. Corporate consolidation. Unending unification.

No doubt you’ve been asking yourself if there seems to be more of these mergers, consolidations and unifications over the past few years. The answer is yes, and for those concerned about concentration and antitrust it’s a troubling trend.

The National Farmers Union (NFU) Legislative Committee met recently to discuss what could be done to strengthen existing antitrust law. Attorney Peter Carstensen, a professor at the University of Wisconsin Law School specializing in antitrust, and a former U.S. attorney in the antitrust division, led the discussion.

Carstensen explained that both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have become more permissive in the mergers that are being allowed. He credited this trend to Reagan/Bush appointments, which include judges that are more willing to allow mergers than their predecessors were.

Following the discussion, the NFU Legislative Committee made ten action recommendations that it will follow in future legislative activities. They are:

1. Require consideration of merger impact on producers. Many transactions are already subject to an environmental impact statement. NFU believes a similar requirement should focus on how agricultural mergers, alliances, and marketing agreements effect producers.

2. Require affirmative approval for mergers. In Europe, the government regulator must make a finding that a particular merger should be allowed. In the U.S., mergers are allowed unless the DOJ or FTC files a suit with the court to prohibit the merger.

3. Require disclosure of alliances and marketing agreements. Under current U.S. law, mergers and acquisitions that involve a company with assets of $100 million or more and a company with assets of $10 million or more, must file with the government. Mergers are reviewed by the FTC or DOJ. However, alliances and marketing agreements between firms may have the same impact on the public, and yet, are not subject to review. NFU believes agreements between large firms that enable the firms to work together (as if the firms were merged) should be filed with the government and subject to antitrust review.

4. Require DOJ and FTC to list reasons for not filing suit and require public disclosure. This requirement would make DOJ and FTC more accountable to the public when they decided not to prohibit a merger between large firms. It would also provide Congress with the necessary information to determine whether current law is adequate to maintain (or rebuild) competitive markets.

5. Restoration of competition. In many sectors, competition is already gone. NFU is interested in looking at steps to rebuild competition. This may include developing producer-owned cooperatives, regaining producer control of existing cooperatives, developing alternative markets, and others.

6. Improve contracts for agricultural production. NFU is interested in increasing the ability of producers to negotiate fair contracts. For those who produce exclusively for contract, such as many poultry growers, it may be necessary to establish bargaining groups, develop model contracts, and establish specific prohibitions against unfair practices. Independent producers who occasionally produce for contract are also in need of contract protection. This need may become more pronounced with the increased use of genetically modified seeds and other inputs that require producers to sign contracts with large agribusiness companies.

7. Global antitrust. NFU recognizes that many of the same firms that dominate U.S. agriculture also do business around the world. Therefore, mergers within the U.S. should also be scrutinized for their impact on the world market.

Currently, there is not a comprehensive source that tracks mergers and acquisitions on a global basis. This information is essential as we move into the next century. It should be noted that the U.S. has extraterritorial jurisdiction if U.S. commerce is impacted. However, in the past, the U.S. has opposed global antitrust action and World Trade Organization jurisdiction.

8. Consider litigation of mergers violating antitrust laws. Current law allows the state attorneys general to file suit against mergers that have occurred in the past and are now resulting in antitrust violations. NFU should consider whether to encourage suits against such mergers. NFU should also continue to be active in contacting DOJ and FTC regarding pending mergers.

9. Repeal the Illinois Brick decision to allow producers standing to sue retailers. Precedent set by the Illinois Brick case prevents a producer from filing a suit against retailers, unless the producer is directly doing business with the retailer. Many producers have urged Congress to overturn this decision since retail prices and concentration at the retail level affect producer prices. On the other hand, some in antitrust law caution that reopening the issue could result in Congress lessening the “treble” damages that are recoverable under current law for those who have standing to sue.

10. Clarify responsibility of Packers and Stockyards Administration. Producers have urged USDA’s Grain Inspection and Packers and Stockyards Administration (GIPSA) to take a more aggressive role in enforcing the Packers and Stockyards Act, which prohibits anticompetitive livestock practices. There have been efforts to increase GIPSA jurisdiction over poultry.

Interested in Agriculture?

Share your voice and help shape the future of farming and ranching in the Rocky Mountain region.

Become a Member