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The Five Developments You Should Follow if You Want to Know What Antitrust Enforcers Are Doing in the Fields of Agriculture

Posted  October 11, 2021
By Taline Sahakian, Alan H. Schwartz

While you may have noticed how expensive your recent trips to the supermarket have become, have you thought about why?  Is it because of the pandemic? Shipping problems?  Is it due to problems with the food supply?

The short answer is “all of the above,” but, according to the Biden administration, antitrust abuses—including consolidation in the agriculture industry—could also be playing a major role in the hefty price increases for beef, pork and poultry.

Agriculture Antitrust Lawyer

For example, the price of pork has increased by 12 percent in the past nine months, and today four companies control the U.S. hog market with 50% control by two foreign-owned meatpackers–JBS (Brazilian-owned) and Smithfield Foods (Chinese-owned).  The price of beef has risen by 14 percent over this period.  More than 80% of the beef in the U.S. is likewise currently processed by just four companies:  Cargill, Tyson Foods, JBS USA, and National Beef Packing Co.

In 2018, the four largest companies involved in pork processing controlled 70% of the market and in chicken processing it was 59%. Similarly, some input markets (e.g., markets for seed, equipment, feed, fertilizer) are controlled by just a few companies.  For example, four firms control more than 60 percent of global proprietary seed sales.

While the National Farmers Union, the nation’s second largest farm group, is launching a campaign to counter consolidation in the agriculture industry, trade groups for the meat industry, including the North American Meat Institute, have pushed back against the allegations that industry consolidation has caused price inflation, and have claimed that higher retail prices were due to market conditions, including the effects of COVID and labor shortages.

Although you may be hearing a lot about antitrust reform targeting big tech companies, that is not the only industry in the antitrust spotlight.  The agriculture sector is also a prime target for antitrust regulators.  If you are interested in the new fields being plowed by antitrust enforcers, here are five developments you should be aware of and consider monitoring.

1) The Biden Administration Has Its Eyes on the Agricultural Sector

In July 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy.  The Order explicitly mentions consolidation in the agricultural industry and how it is making it harder for small family farms to survive.[1]

Farmers are squeezed between concentrated market power in the agricultural input industries – seed, fertilizer, fee, and equipment suppliers – and concentrated market power in the channels for selling agricultural products.  As a result farmers’ share of the value of their agricultural products has decreased, and poultry farmers, hog farmers, cattle ranchers, and other agricultural workers struggle to retain autonomy and to make sustainable returns.”

Significantly, Secretary of Agriculture Tom Vilsack is a member of  the White House Competition Council established by President Biden.  That Council held its first meeting in September, when Council members received briefings on recent efforts to bolster competition.

To address competition concerns and improve the treatment of farmers, President Biden’s Order directs the Secretary of Agriculture to consider initiating rules under the Packers and Stockyards Act to strengthen regulations against unfair, deceptive and anticompetitive practices in livestock, meat and poultry industries.[2]

The Biden administration is also requiring the Secretary of Agriculture to ensure that consumers have accurate and transparent labelling of products as being “Product of USA,” and that intellectual property does not unnecessarily reduce competition in seed or other input markets.[3]

The Biden administration also recently announced that it is planning to act against rising grocery prices by cracking down on price-fixing and consolidation in the beef, pork and poultry sectors.  According to the Director of the White House National Economic Council, half the increases in grocery prices can be attributed to, and are driven by, price increases in poultry, beef and pork.

2) The Department of Agriculture Appears to Have Hit the Ground Running on Reforms

The U.S. Department of Agriculture has already started implementing reforms.

The U.S. Department of Agriculture has issued new guidance regarding how it will enforce the Packers and Stockyards Act (“PSA”). (See FAQs.)  The Department has announced plans to issue proposed rules to support enforcement under the PSA and to work on price transparency for farmers. Under the current “Undue and Reasonable Preferences and Advantages” Rule of the PSA that became effective in January 2021, the Department of Agriculture’s Packers and Stockyards Division would consider various criteria to determine whether the conduct of meat packers, contractors or dealers amount to an undue or unreasonable preference or advantage. (This would involve examining whether the preference or advantage cannot be justified based on (1) a cost savings; (2) meeting a competitor’s prices; (3) meeting other terms offered by a competitor; and (4) a reasonable business decision.)  The FAQs clarify that to establish a violation of the PSA, industry-wide injury to competition does not need to be proven, and the Department’s future rulemakings on the PSA will provide more guidance on the analysis to determine whether preferences will be considered undue.

The Department has also announced significant investments to expand processing capacity and increase competition in meat and poultry processing.  It has joined with the Federal Trade Commission (“FTC”) in supporting complementary rulemaking regarding “Made in USA” product labelling.

The Department of Agriculture is also slated to issue two reports to the White House Competition Council pursuant to the Executive Order.  One report, to be issued within 180 days of the Executive Order (by early January 2022), will outline a plan to promote competition in agricultural industries and to support value-added agriculture and alternative food distribution systems, including, among others, providing farmers with useful information such as model contracts, encouraging transparency and standards to inform consumers to help them choose products that support fair treatment of farmers and agricultural workers, and enhanced tools to protect whistleblower and monitor agricultural markets.[4] The second report, to be issued within 300 days of the Executive Order (by early May 2022), will address the effect of retail concentration and retailers’ practices on competition in the food industries.[5]         

3) The FTC Has Agriculture on the Brain Too

Recently, under the leadership of its new Chair, Lina Khan, the FTC announced that it was also going to “crack down on marketers who make false, unqualified claims that their products are Made in the USA.”

Khan joined Commissioner Rohit Chopra in issuing a statement that with the rule, the FTC “has activated a broader range of remedies, including the ability to seek redress, damages, penalties, and other relief from those who lie about a Made in USA label.  The rule will especially benefit small businesses that rely on the Made in USA label, but lack the resources to defend themselves from imitators.”  The FTC’s “Made in USA” labeling rule will prohibit marketers from using that designation unless “1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the product are made and sourced in the United States.”  There was much interest in the rule from farmers, ranchers and others in the agricultural industry who were generally in favor of the stricter standards.

Several farm and agricultural trade unions supported Khan’s confirmation as FTC Commissioner by endorsing her as a “champion for farmers, ranchers, and workers,” who has advocated for full enforcement of the Packers and Stockyards act to curb “abusive” business practices by “monopolistic” corporations in the seed, agrochemical, meatpacking and retail markets.  She has long been a supporter of farmers and agricultural workers, writing in 2012 about the damage monopolization has caused to rural America.  In her article, Khan criticized the administration at the time for its handling of concentration in the industry after it engaged in multiple agricultural hearings in 2010 to expose problematic issues:

The other factor the administration blames is the weakened state of America’s antitrust laws. In the past, antitrust law was used to promote competition and to protect citizens from concentrated economic power. But today, enforcers say they are handicapped even when confronting markets that are no longer competitive. “However desirable, today’s antitrust laws do not permit courts or enforcers to engineer an optimal market structure,” the DOJ wrote in its recent report on the 2010 agriculture hearings. Far-reaching actions—like the Wilson administration’s challenge of the meatpacking industry ninety years ago—are, they say, simply unimaginable under today’s narrow antitrust framework.

Varney, who has since left the DOJ for private practice, says that the Justice Department pushed the law as much as it could under her tenure. “If you overreach in the courts you will lose, and the very behaviors you are calling illegal will be validated by the court,” she said. “This is not about a fear of taking risks or a fear of losing. It’s a fear of setting the producers back.”

One wonders, though, whether the administration’s actions—taken as a whole—did not set the farmers back as much as would a loss in court. By documenting the big processing companies’ exploitation of independent farmers, then failing to stop that exploitation and retreating in almost complete silence before entirely predictable resistance from the industry, the administration, for all intents, ended up implicitly condoning these injustices. The message to the processing companies is, after all, absolutely clear: you are free to continue to act as you will.

As FTC Chair, Khan will no doubt try to make absolutely clear to processing companies: the status quo cannot remain.

4) Crackdowns on Price-Fixing and Coordination Among Big Players

The U.S. Department of Justice (“DOJ”) has been investigating alleged “price-fixing, bid rigging and other anticompetitive conduct in the broiler chicken industry.”  Koch foods was recently indicted for participating in a conspiracy to fix prices for broiler chicken products.  Pilgrim’s Pride, another chicken producer, has already pleaded guilty and was sentenced in February to pay a $107 million criminal fine for its role in the conspiracy, which began in 2012 and lasted at least until 2019.

Last month, a federal court permitted a class-action lawsuit against JBS, Tyson, National Beef and Cargill to proceed on a claim that the meat packers conspired to suppress the price of cattle and increase the price of beef.  In re Cattle Antitrust Litigation, filed in 2019 in the U.S. District Court for the District of Minnesota, accuses the four meatpackers of forcing the cost of cattle down and increasing the price of beef through tactics such as “coordinated procurement” and “reduced slaughter capacity,” which allegedly involved defendants agreeing to close and underutilize plants.   Winn-Dixie Stores and Bi-Lo Holding filed a lawsuit in the District of Minnesota against the same four meatpackers with similar allegations in August 2021.  The DOJ also launched an investigation regarding these meatpackers in 2020 but has yet to release its findings.

More such investigations and lawsuits may be on the horizon.

5) More Merger Review on the Horizon

Merger review and challenges are also on the mind of legislators and regulators. The FTC Chair’s Memo to Commission Staff and Commissioners Regarding the Vision and Priorities of the agency outlined as a first policy priority addressing “rampant consolidation and the dominance that it has enabled across markets.”

That consolidation is on full display in the agricultural sector where numerous mergers over the years have contributed to concentration, including Dow and DuPont, ChemChina and Syngenta, and Bayer and Monsanto.  Other notable mergers have demonstrated the continued consolidation in the meat and poultry industries. Tyson Foods acquired Hillshire Brands in 2014 and Keystone Foods in 2018.  Hormel acquired Applegate Farms in 2015. National Beef acquired Iowa Premium in 2019.

Recently, U.S. Senator Chuck Grassley urged the DOJ to examine the latest big agriculture deal, a proposed $4.53 billion deal for commodities trader Cargill and agricultural investor Continental Grain to buy Sanderson Farms, the third largest chicken producer in the United States.

The FTC and the DOJ have authority to challenge mergers under Section 7 of the Clayton Act, which states, in relevant part, that “[n]o person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock . . . where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”  15 U.S.C. § 18 (emphasis added).  Section 7 applies prospectively to potential mergers that may lessen competition but can also apply to transactions that are already consummated.  Private parties, such as competitors, customers, or suppliers of merging parties, can also challenge mergers under this provision and may also obtain divestitures if they can show injury.

In June 2021, the DOJ required Zen-Noh Grain Corp. to divest nine grain elevators in order to proceed with its $300 million acquisition of Bunge North America Inc.  The DOJ complaint alleged that defendants “are two of only a small number of competing grain purchasers in nine geographic areas.  Without the required divestiture, the combined company likely would have been able to pay less for grain and lower the quality of services offered to farmers.”


For those who participate in the agricultural sector and have a beef, now is an opportune time to talk to legislators, comment on proposed rules and legislation, raise concerns about mergers or individual anticompetitive practices with antitrust enforcers and potentially explore legal recourses.

Edited by Gary J. Malone

[1]  Executive Order on Promoting Competition in the American Economy (“Executive Order”), Section 1.

[2]  Executive Order, Section 5(i)(i).

[3]  Executive Order, Sections 5(i)(ii) & Section 5(i)(v).

[4] Executive Order, Section 5(i)(iii).

[5] Executive Order, Section 5(i)(iv).


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