Another Concentration Bill Introduced

April 13, 2000

A group of Senate Democrats have introduced legislation designed to stop agribusiness mergers that harm farmers, ranchers and rural communities. It’s the second bill introduced in the Senate concerning concentration; the other is from Sen. Charles Grassley (R-IA) that seeks to put USDA on an equal footing with Justice and the Federal Trade Commission to challenge a merger. The General Accounting Office also has at least two investigations underway regarding mergers and acquisitions in agriculture.

The Democrats’ bill would:

–Direct the Secretary of Agriculture to investigate anti-competitive practices (such as unreasonable preference, right of first refusal requirements by packers, and unjustified price discrimination), crack down on retaliation against whistle-blowers and packer ownership of a packer’s total slaughter capacity;

–Require USDA to conduct pre-merger community impact analyses and assess whether proposed mergers would have a negative impact on farms, ranches or rural communities;

–Establish a Family Farmer and Rancher Claims Commission that would reimburse producers who suffer extraordinary damages as a result of unfair practices described in the bill;

–Require agriculture-related businesses that do at least $100 million in business per year to file with the Secretary of Agriculture all strategic alliances, lobbyists, interlocking boards of directors and ownership in other agribusiness or agriculture-related firms, and

–Require a General Accounting Office study on concentration in milk processing; farm to retail price spreads, the potential benefit of breaking up "mega-firms," any competition-limiting effects of biotech patents and multinational mergers, and market power as it relates to marketing agreements, forward contracting and formula contracts.

Sens. Patrick Leahy (D-VT) and Russell Feingold (D-WI) also asked the GAO to investigate the disparity between farm and retail milk prices. The senators specifically want to know which market forces are depressing farm prices and why the trend has persisted while retail prices continue to increase.

Last month, Sen. Charles Grassley (R-IA) introduced a bill that would require USDA to review all agriculture-related mergers, give USDA the same ability as the Justice Department and the Federal Trade Commission to challenge a merger and grant USDA expanded authority to prohibit anti-competitive practices in agribusiness.

Grassley also asked GAO to investigate how well Justice and USDA have met their respective obligations to enforce existing antitrust laws specific to agriculture. A report from GAO is expected sometime this summer, Grassley says.