Grassley Sends Letter to DOJ on Competition, Antitrust Issues in Ag Sector

May 27, 2009 07:00 PM
 

via a special arrangement with Informa Economics, Inc.

Assistant Attorney General Varney has indicated her division will put more focus on competition in agriculture


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Sen. Chuck Grassley (R-Iowa) said Christine Varney, the new attorney general for antitrust, “made some promising comments about her division within the Justice Department putting more focus on competition in agriculture. Well, that was good news to me because I never thought the Justice Department cared anything about agriculture.”

Grassley said he has “expressed strong reservations about some specific anti-business mergers and the continued bigger-is-better trend in agriculture.” He said agriculture has consolidated “to the point where family farmers, independent producers, and other small-market participants don't have equal access to fair and competitive markets. It's also a lot easier for large companies to engage in anti-competitive and predatory business behavior.”

Saying he continues to be concerned about the increased concentration in the industry, and that it is going to lead to fewer product choices and higher product prices for American consumers, Grassley said it is “important that we have vigilant antitrust enforcement looking out to protect consumers and ensure that there's fair and open marketplace in agriculture like there is in other segments of our economy.”

“I've never really thought the Justice Department has paid much attention to this,” but “I appreciate that Varney has shown concern about agriculture concentration, and I'm interested in learning more about her plans," Grassley said.

Grassley earlier this week sent a letter asking how the antitrust division will increase antitrust oversight and enforcement of mergers, acquisitions and business practices in the farming community.

A transcript of Grassley letter follows:

Dear Assistant Attorney General Varney:

“I read with interest an article that reported the Antitrust Division will be paying more attention to competition in the agricultural sector. I would like to learn more about your intentions to increase the Antitrust Division's focus on agriculture. You should know that I am fully supportive of any plans to step up the Justice Department's oversight of mergers, acquisitions and business practices in agriculture to ensure that these transactions do not harm competition. I welcome any plans by the Justice Department to make agriculture a priority for the Antitrust Division.

“I am sure that you are familiar with my concerns regarding increased consolidation in the agricultural sector and its impact on rural America. For well over a decade, I've expressed strong reservations about particular agri-business mergers and the continued 'bigger is better' trend in agriculture. I share the concerns of many agriculture groups and antitrust experts that the agriculture industry has consolidated to the point where family farmers, independent producers and other smaller market participants do not have equal access to fair and competitive markets. Large agri-businesses are in a far better position to engage in anti-competitive and predatory business practices. I'm concerned that increased concentration in the industry will lead to fewer product choices and higher product prices for the American consumer.

“I've introduced several bills to address these concerns. For example, Sen. [Herb] Kohl (D-Wis.) and I have introduced S 364, the Agriculture Competition Enhancement Act of 2009, which among other things, would require the Justice Department to draft competition guidelines specifically for agriculture and to conduct post-merger reviews to ensure that agri-business transaction are not anti-competitive. I encourage you to review this legislation and work with me to address concerns about excessive concentration and anti-competitive behavior in agriculture.

“I look forward to hearing from you about how the Antitrust Division will increase antitrust oversight and enforcement of mergers, acquisitions and business practices in the agriculture sector.”


Comments: This topic has been a frequent question I receive during my recent speeches, with viewpoints coming from all sides of this sensitive issue. I will report back on this matter if and when Varney responds to Grassley's letter. But in recent remarks and speeches, Varney has made clear she and her division will be quite active in this area.

Meanwhile, Senate Majority Leader Harry Reid (D-Nev.) said the Senate will consider legislation with the antitrust treatment of the nation's railroads when lawmakers return the week of June 1. The legislation he referred to is the Railroad Antitrust Enforcement Act (S 146). The Congressional Quarterly reported that a jurisdictional squabble between two Senate committees could derail passage of a measure aimed at repealing an antitrust exemption for freight railroads. The legislation, sponsored by Sen. Kohl, would eliminate a long-standing exemption to antitrust laws that allows railroads to gain approval from the Surface Transportation Board (STB) for rail mergers, acquisitions and collective rate-making agreements. The repeal is designed to bring rail in line with other transportation industries, such as trucking and aviation, that must seek approval from the Justice Department for such business steps. Kohl and other bill supporters say railroads have used their antitrust exemption to raise rates unfairly. Because of mergers, four Class I railroads — the large freight carriers — provide 90 percent of rail transportation, leaving some areas of the country with service from only one railroad. Bill advocates say industries in these areas, known as captive shippers, have little choice but to pay the railroad’s rate. The Senate Judiciary Committee, which has jurisdiction over antitrust issues, approved the repeal legislation by 14-0 on March 5.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 

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