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Obama Administration Poised To Answer Question: Where’s The Antitrust Beef?

Posted  May 6, 2010

Federal regulators are on the verge of answering the question of “Where’s the beef?” in the Obama administration’s regulation of competition the meat industry.

The United States Department of Agriculture will soon release new proposed antitrust rules for the meat industry that could significantly alter the balance of power between farmers and the big companies that buy their meat.  Although the USDA has not said when the new proposed rules will be made public, the 2008 Farm Bill requires that they be put in place by summer, which means the announcement could be made any day now.

There is widespread speculation among activists, farmers and meat industry officials about how far the Obama administration will go in regulating competition in the industry.  The proposed rules are likely to address, among other things, when a company may lawfully choose to buy one producer’s cattle or hogs over another, and when poultry companies can require farmers to upgrade their chicken houses with new equipment.

The new rules may well prove to be the most sweeping antitrust rules for the meat industry in decades.  The Obama administration has already signaled an interest in greater regulation with a series of joint Department of Justice and USDA workshops on competition and regulatory issues in the agriculture industry.  The stringency of the new rules is likely to be a good indicator of the administration’s regulatory bent.

The meat industry anxiously awaits the new rules, which could affect the prices paid by the consumer.  Although the meat industry is already heavily regulated, the market has limited competition.  For example, only four companies buy and slaughter 80% of the beef in the U.S.  Likewise, poultry companies determine chicken prices and can compel farmers to upgrade their chicken houses even though farmers argue that the upgrades only benefit the poultry company.

It seems likely that the Obama administration will be proposing – and fighting for – regulations that are tougher and father reaching than any since the Great Depression.  The big meat industry companies are already gearing up to protest any rules they deem too strict.

Tagged in: Antitrust Enforcement, Antitrust Legislation,