The Federal Trade Commission (FTC) and Department of Justice (DOJ) are holding a series of forums to hear from those who have been affected by mergers and acquisitions in order to draft new enforcement guidance. First in the series was the food and agriculture industry, for which a hearing was held March 28.
The speakers were representatives from across the supply chain, ranging from producers to supermarket and retailer owners, along with a veterinarian. In January, the FTC and DOJ put out a request for information on merger enforcement and welcomed input from the public. Hearings will continue over the next three months, and the agencies plan to use input to modernize enforcement of antitrust laws regarding mergers.
“One of my first assignments in a new job more than a decade ago was to investigate the deep consolidation that had occurred across agriculture markets, with farmers now often lacking choice in how to get their products to market,” said FTC Chair Lina Khan in her opening remarks.
“Some evidence suggests that this concentration across markets, be it in poultry, beef or seeds, has contributed to higher prices for American consumers, lower income for farmers and a food system that is less resilient.”
Dr. Kathryn Bedell, a veterinarian who also operates a retail store to sell her ranch’s grass-fed beef, kicked off the speaker portion of the forum. Bedell brought attention to the consolidation within the beef industry, which led to her creating a niche market to sell in. She noted barriers to expansion due to processing limitations, misrepresentation and lack of access to grocery stores.
“New entrants are blocked at all levels from lack of profitable cattle markets, lack of processing and exclusionary behavior in distribution and retail,” Bedell said. “This has all been the result of keeping competition out and results in even more extreme market and price control consolidation, but also limits consumer choice.”
She called for the FTC and DOJ to examine antitrust and anticompetition laws, but she asked for the burden of filing suits not to be put on small businesses.
Mike Salguero, founder and CEO of ButcherBox, spoke on the difficulty of having grass-fed beef processed for ButcherBox customers.
“The number of plants we can work with to grow a scaled domestic grass-fed beef industry can be counted on two hands,” Salguero said. “This is currently the biggest limiting factor to growing domestic grass-fed beef.”
He expressed frustration with having to mostly outsource grass-fed beef from Australia due to the constraints in the U.S. to find a processor willing to do business with the company. “I want to be able to source 100 percent of ButcherBox’s grass-fed beef from American ranchers, but unless the stronghold on processing capacity is loosened, I’m not optimistic we’ll be able to do that,” he said.
Tom Charley, a fourth-generation small retailer, spoke of the difficulty to compete against large retailers such as Walmart. “If we continue to let companies like Walmart set the rules and avoid competition, that’s literally what the market’s going to be. It’s going to be three-week-old meat. It’s going to be cookie cutter big box stores.”
Several other speakers expressed similar difficulties they face in the crop, pork and dairy sectors. The forum was also open to members of the public to give brief remarks. Lia Biondo, director of policy outreach with the United States Cattlemen’s Association (USCA), spoke on behalf of the organization and highlighted the Big Four’s control of the industry.
“As USCA Vice President Justin Tupper said last June when he testified before the Senate Agriculture Committee, we can either work to eliminate the occurrence of anticompetitive practices and market manipulation in the meatpacking sector, or as we’ve seen and done in the past in other industries, we can break the model so they cannot have as much influence or ownership of the market,” Biondo said.
Jonathan Kanter, assistant attorney general of the DOJ Antitrust Division, gave closing remarks at the forum. “Agriculture plays such a vital role in our society. It is essential that markets, especially markets that affect our food, remain competitive and free from anticompetitive conduct,” Kanter concluded.
“Any antitrust violation, consolidation that negatively impacts farming harms communities, it harms our food supply and it threatens the health and safety of our nation.”
Members of the public are encouraged to submit comments regarding mergers by April 21 at regulations.gov by searching for docket ID FTC-2022-0003-0001. — Anna Miller,WLJ managing editor
