GIPSA debate - two years later

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Remember those workshops on competitiveness in agriculture the Department of Justice (DOJ) and USDA hosted back in 2010? They were big news in our industry at the time, particularly the one focused on livestock held in Fort Collins, Colorado in August, where debate over the contentious “GIPSA rule” reached a fevered pitch.

In a recent report, the DOJ looks back at those workshops, examines what they learned and states a commitment to competitiveness in agricultural markets and enforcement of antitrust and other laws.

The report lists common themes or concerns that emerged during the workshops, including:

  • Market concentration
  • Merger enforcement
  • Monopsony (excessive buying power)
  • Bid rigging
  • Potential market manipulation
  • Market transparency
  • Captive ownership
  • Contracting
  • Regulatory burdens
  • Low or volatile prices for agricultural commodities
  • High input prices
  • Lack of capital
  • A variety of issues with genetically modified seeds.

Some of these issues fall outside the authority of the DOJ, particularly of the Antitrust Division, which partnered with USDA on the workshops. However, the DOJ has broad authority to regulate business practices under antitrust laws.

“There are any number of practices, not so commonly known, that, under the right conditions, can create antitrust issues,” the report states. “For example, the sharing of price or other competitively sensitive information can facilitate collusion or otherwise reduce competition.

“Further, agreements to limit bidding competition or divide territories would trigger antitrust scrutiny. The Division will take all appropriate enforcement action against any practices—those mentioned or the many and varied unmentioned—that threaten to harm the competitive process.”

In a release last week, the National Farmers Union encouraged the DOJ to follow through on its pledge for enforcement. “We are pleased that DOJ has taken some further action as a result of the DOJ-USDA workshops in 2010,” says NFU President Roger Johnson. “Competition and fair markets have been long-term priorities for NFU and the proceedings in 2010 offered hope that this administration would reverse the decades of under-enforcement of antitrust laws

“Much more work remains to be done to ensure that family farmers and ranchers have an opportunity to succeed in the marketplace,” Johnson adds. “I look forward to the Antitrust Division of DOJ following through on the statements in the report.”

The proposed GIPSA rule, of course, reached its anticlimax in December 2011, when USDA issued a watered-down final rule that left out most of the provisions regulating livestock markets. (Read “What’s left out of the GIPSA rule” from Drovers/CattleNetwork.) The DOJ could, however, pursue some of the same issues under antitrust laws. Time will tell whether the department becomes more aggressive in agricultural markets.

Read the DOJ report titled “Competition and Agriculture: Voices from the workshops on agriculture and antitrust enforcement in our 21st century economy and thoughts on the way forward.”



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