Personal Injury Law

USDA and DOJ Scrutinize the Meat Packing Industry

By Joseph Eckhardt

Competition in the meat packing industry is currently a central focus of the Antitrust Division of the Department of Justice ('DOJ') and the USDA.

In 2008, the DOJ and 16 states challenged the merger of JBS and the National Beef Packing Company, leading the parties to abandon the deal. In its amended complaint filed against the transaction, the DOJ opposed the merger, claiming that it would have combined two of the four largest beef packing companies in the U.S. ('Post merger, over 80% of the nation's fed cattle packing capacity would be controlled by a three-firm oligopoly. . . .').

The DOJ's concern about concentration in the meat packing industry apparently continues. As is often the case, a merger investigation educates regulators, and after the investigation concludes, the government's lawyers maintain an interest in the industry. In March, the DOJ Assistant Attorney General for the Antitrust Division, Christine Varney, declared that in the near future we will see 'unprecedented cooperation and collaboration between [the DOJ] and the USDA,' in her remarks at the first DOJ/USDA competition workshop, held in Ankeny Iowa. Varney noted that collaboration will include 'taking full advantage of the authority that's delegated to us in the Packer[s] and Stockyard[s] Act,' a 1921 statute that specifically addresses competition in the meat packing industry.

Earlier this month, the Associated Press reported that officials from the USDA's Grain Inspection, Packers and Stockyards Administration ('GIPSA') are speaking to cattle ranchers about competition and pricing in the meat packing industry. CEO of the Ranchers-Cattlemen Action Legal Fund ('R-CALF'), Bill Bullard, is quoted in the article, noting that ranchers in his organization have been frequently meeting with USDA officials in recent months. Ranchers argue that the country's four biggest meat packing companies (Tyson Foods, JBS, Cargill, and National Beef) benefit from 'buyer power.' They claim that buyer power drives down prices for the cattle that they raise. Economists would argue that such buyer power ultimately benefits customers.

In any event, does all this talk mean that aggressive enforcement of the Packers and Stockyards Act (to the benefit of ranchers) is on the horizon? A USDA official quoted in the Associated Press article suggests that may be true, corroborating the Assistant Attorney General's comments above ('[W]hat we're doing at GIPSA now is trying to . . . enforce the Packers and Stockyards Act . . . .').

The DOJ and USDA are spending this entire year evaluating antitrust and competition policy in the agriculture industry, starting with a series of public workshops. There will be a workshop on the poultry industry on May 21, in Normal, Alabama. On August 27, the agencies will host a workshop in Fort Collins, Colorado, addressing 'concentration in livestock markets, buyer power and enforcement of the Packers and Stockyards Act.'

Full post as published by Food Liability Law Blog on May 20, 2010 (boomark / email).