Investigations Hint at Growing Appetite for Antitrust Enforcement
Corporate consolidation in the food and agriculture industries makes our food system less equitable and undermines food security. When just a few players control each link in the food supply chain, those companies can charge customers more for food products while paying farmers less, treat farmers and food chain workers unfairly, influence policy decisions, avoid regulation, and engage in anticompetitive practices like price fixing. On top of that, concentration inhibits innovation and makes our food system more vulnerable to disruption -- all of which family farmers and ranchers have been warning legislators about for decades.
The last several administrations have all but ignored antitrust issues, allowing corporations across most sectors to amass oligopoly or monopoly power with little or no oversight. But it seems that might be changing.
Within the last few weeks, several investigations into market concentration within the meat processing and packing industries have seen significant developments. Two weeks ago, four senior executives at two major poultry companies - Pilgrim's Pride Corp. and Claxton Poultry Farms - were indicted for conspiring to artificially inflate the price of broiler chickens sold to grocery stores and restaurants through price fixing and bid rigging. The case is the result of an ongoing federal probe of anticompetitive conduct in the broiler industry. Tyson Food, the largest chicken producer in the United States, has publicly acknowledged its role in the alleged price fixing and has indicated that it is cooperating with the Department of Justice (DOJ). In return, the company will be spared criminal convictions, fines, and prison time.
In a separate investigation, DOJ recently subpoenaed the four largest meatpackers - JBS, Tyson, Cargill, and national Beef - over possible antitrust violations. The companies, which collectively control upwards of 85 percent of beef packing in the United States, have come under fire after the closure of several meat packing plants caused wholesale beef prices to jump 20 percent while prices paid to ranchers fell 11 percent. In response, 11 attorneys general called on DOJ to "investigate the state of competition in this industry and the dynamics that are depriving cattle ranchers and American consumers of the benefits of a competitive cattle industry." The U.S. Department of Agriculture (USDA) is also looking into the matter.
It is not yet clear what the result of these investigations might be, but many hope that DOJ will pursue punishments for anticompetitive behavior and mechanisms to prevent it in the future. Just this week, a former Bumble Bee Tuna executive was fined $100,000 and sentenced to more than three years in jail for conspiring to fix canned tuna prices from 2010 to 2013. The company also paid a $25 million fine, and StarKist paid another $100 million for its role. Such significant punitive measures are uncommon for antitrust charges, but may set a precedent for future cases.