AMI Rejects Anti-Competition Concerns

US - Efforts to regulate the meat industry are ill conceived and should not be implemented, as existing anti-trust and competition statutes are equally applicable and effective for the meat industry, says the American Meat Institute (AMI).

12 January 2010

3 minute read

North America

AMI filed its comments to the Department of Justice (DOJ), in response to an 27 August 2009, Federal Register notice detailing DOJ and US Department of Agriculture (USDA) plans to hold public workshops in a series of cities in 2010 to respond to concerns expressed by some agricultural producers about “changes in the agricultural marketplace, including increasing processor concentration in some commodities.”

According to AMI’s comments, the meat and poultry industry is one of the most intensely regulated industries in the economy, with arguably only the nuclear energy industry subject to as much daily scrutiny. Regulation and oversight have increased in the last two decades in response to new food safety issues, such as E. coli O157:H7 in beef and Listeria monocytogenes on ready-to-eat meat and poultry products.

“One could argue forcefully that the growing scientific knowledge base that leads to evolving food safety policies, and hence a much safer food supply, has also contributed to a more concentrated meat industry,” said Mark D. Dopp, senior vice president of regulatory affairs and general counsel.

Mr Dopp detailed in the comments that during the last two decades and in response to regulatory policies such as the 1994 declaration that E. coli O157:H7 in ground beef is an adulterant or the 1996 Hazard Analysis and Critical Control Point/Pathogen Reduction Final Rule, a number of small and mid-sized family owned meat and poultry companies have taken action to protect themselves by cashing out or merging with other larger, more diversified companies.

Supplemental comments from antitrust expert Stephen Calkins, professor of law at Wayne State University and former General Counsel to the Federal Trade Commission, explained that antitrust laws such as the Sherman Act are considered the “Magna Carta” of free enterprise and are written in such a way that they may be applied by courts with consideration to evolving economic understanding and particular facts.

In the case of the meat industry, courts need the flexibility to consider the impetus for changes in market conditions like significant and beneficial new food safety regulations that prompt companies to protect against risk to ultimately survive or protect company assets.

When Congress has expressed concerns about antitrust issues and outcomes, the response historically has been to increase funding for enforcement. “What Congress has not generally done, thankfully, is to respond to concerns about underenforcement by amending the antitrust laws to impose higher standards on particular industries,” Mr Calkins said.

Mr Calkins concluded by saying that, “The antitrust system is majestically general and fully capable of evolving as needed to reach right results. If wrong results are being reached, the last thing Congress should do is to draft industry-specific rules. Doing so is both unnecessary and harmful since it would remove part of the impetus for needed evolution in general standards.”

In its comments, AMI also stressed the importance of engaging persons with specific, substantive expertise at each of the planned public meetings. AMI recommended that the nominated panelists be divided into four categories: packers/processors; legal/antitrust attorneys; finance/banking; and economists and academics.

“Agricultural competition policies regarding the livestock and meat sector should be founded on the same, fundamental antitrust principles that apply to the economy as a whole. Such an approach encourages the right of individual persons or companies to follow the path that best suits their economic interests, within the legal parameters established by the Sherman Act and the Clayton Act,” Mr Dopp said.

“The contemplation of antitrust or farm policy that deviates from this approach by favouring one sector over another or inhibiting or restricting a competitive market should be rejected.”