Consolidation is occurring across all sectors of the agricultural industry at the farm, supply, and service levels. Agriculture continues to see a shift in cropland and livestock production to larger farms. At the same time, consolidation has occurred in the agricultural service and supply areas. Mergers and acquisitions have happened between some of the largest agribusiness firms in areas such as crop protection products, fertilizers and meat packers. Approval of these acquisitions and mergers, or similar deals, requires compliance with antitrust rules and regulations set forth to avoid monopolies, preventing the loss of competition and unfair economic impacts.
There are three broadly applicable laws that have antitrust provisions, the Sherman Anti-Trust Act (1890), the Federal Trade Commission Act (1914), and the Clayton Antitrust Act (1914). In addition, specific to agriculture, the Packers and Stockyards Act (1921) has some competition provisions. Interestingly the Capper-Volstead Act allows limited exemption from antitrust liability for agricultural producers who market their products on a cooperative basis.
There are three main enforcement actions at the Justice Department’s disposal.
- Criminal prosecution of collusion such as price-fixing and market allocation and civil prosecution of collaboration among competitors which suppresses competition.
- Action to prevent monopolization and the use of predatory or exclusionary conduct to acquire or hold onto a monopoly.
- Preventing mergers from substantially lessening competition in a market.
Policy References
Additional Resources
Federal Trade Commission: Guide to Antitrust Laws
Antitrust enforcement in Agriculture
Thoughts to Consider
- Does Farm Bureau policy adequately address monopolistic (supply)/monopsonistic (demand) concerns in the agricultural industry?
- Do market participants exhibit anti-competitive behavior by unreasonably excluding other companies, or impairing other companies’ ability to compete against them?
- Is there evidence that consolidated firms exert non-competitive market power?
- Has the Justice Department and Federal Trade Commission adequately considered local/regional effects of mergers in their review and enforcement actions?