Standing before a crowd of 600 farmers, lobbyists, lawyers, and politicians packed into a theater on the University of Wisconsin campus, U.S. Assistant Attorney General Christine Varney — the woman spearheading the federal government’s reinvigorated antitrust enforcement effort — had a message for the dairy industry.

“We are keeping a watchful eye on this industry,” Varney told a wary audience in June as she discussed a new antitrust task force of investigators from the Justice Department and the United States Department of Agriculture (USDA).¹

Agribusiness is indeed under the watchful eye of federal authorities, state attorneys general, and plaintiffs’ lawyers who see the potential for a robust new era in antitrust actions. In addition to the ongoing joint task force investigation, the USDA recently proposed extensive new regulations for the meat industry at the same time a wide range of agribusiness companies and cooperatives face existing antitrust lawsuits. The effort seems likely to breathe new life into Depression-era antitrust laws. And on the international stage, a recent United Nations report called for new antitrust mechanisms on a global scale.²

“Is today’s agriculture industry suffering from a lack of free and fair competition in the marketplace?” Attorney General Holder asked at a March workshop outside Des Moines, the first in a series of antitrust “workshops” held across the country by USDA and Justice Department officials. Two months later, Holder told another farm audience that he fully intends to pursue additional antitrust enforcement in agriculture. “I want to assure each of you that the Obama administration is committed to protecting competition vigorously,” Holder said at a May workshop on the Alabama A&M campus. “This is a top priority for today’s Justice Department.”

The Justice Department/USDA workshops only underscore the new emphasis on antitrust actions in the agricultural sector. The Justice Department, along with the attorneys general of Illinois, Michigan, and Wisconsin, filed an antitrust lawsuit in January against Dean Foods, the nation’s largest dairy, alleging it purchased a Wisconsin dairy company to stifle competition. The alleged anticompetitive effect of mergers and acquisitions in the agriculture industry appears to be a primary focus of new antitrust efforts.

In a statement, Dean Foods said volatility in the market was hurting everyone and noted that other commodity groups, including peanuts and tobacco, faced similar calls for reform in recent years.³ “The system is broken, and all of us — farmers, processors, and retailers alike — are paying the price in one way or another,” the company said. The recession, overproduction, and government regulation are the real culprits, Dean said.

Federal officials have also initiated criminal antitrust actions that can net offenders decades in prison and millions of dollars in fines. For instance, tomato magnate Frederick Scott Salyer was arrested by federal authorities in February and has been charged with racketeering, wire fraud, and criminal antitrust violations as part of an alleged conspiracy involving rigged bids and efforts to raise the price of tomato products.⁴ Ten former Salyer employees have pleaded guilty to federal felonies.

And, new legislation is on the horizon. In June, the Obama administration proposed new antitrust rules that would reinvigorate the Packers and Stockyards Act of 1921.⁵ The Associated Press (AP) called the proposed regulations “the sharpest limits on meat companies since the Great Depression.”⁶ Agriculture Secretary Tom Vilsack agreed. “I think it’s fair to say that what we're proposing is aggressive,” Vilsack told the AP. “The reality is, the Packers and Stockyards Act has not kept pace with the marketplace . . . Our job is to make sure the playing field is level for producers.”⁷

Joining the administration, many members of Congress have voiced support for the administration’s antitrust efforts. Senators Kohl, Feingold, Grassley, Schumer, and Leahy, among others, have lent their support to the joint task force initiative. The USDA has also indicated that it may seek to increase enforcement through its Grain Inspection, Packers and Stockyards Administration. The next workshop is scheduled for August 27, in Fort Collins, Colorado, and will focus on the livestock industry.

Federal officials have also looked at the Capper‑Volstead Act, 7 U.S.C. §§ 291-292, the 1922 law allowing farmers to form for-profit associations to collectively market their products. However, after several industry groups voiced concern, Secretary Vilsack clarified that agricultural cooperatives, including Capper-Volstead issues, are not a part of the administration’s stepped-up antitrust enforcement. Varney likewise said the administration “is supportive of the mission of cooperatives and the Capper-Volstead Act,” and stressed that the Justice Department has “no anti-cooperative agenda.”

The plaintiffs’ bar has clearly noticed the increased governmental scrutiny. The Dairy Farmers of America (DFA), an 18,000-member co-op, and Dean Foods are defending against class-action antitrust lawsuits. In April, a suit against the DFA alleged that the co-op conspired to manipulate the cheddar cheese markets at the Chicago Mercantile Exchange.

In addition, other commodities including beef, chicken, pork, eggs, mushrooms, potatoes, tomatoes, and seeds, are the topics of antitrust litigation. Private plaintiffs’ attorneys are aggressively pursuing antitrust claims involving agricultural cooperatives in a number of cases, including In re Processed Egg Products Antitrust Litigation,⁸ In re Mushroom Antitrust Litigation,⁹ and most recently In re Fresh and Process Potatoes Antitrust Litigation.¹⁰

Agribusiness is now faced with the same competitive concerns as its industrial peers. There seems little doubt that an antitrust storm targeting the agricultural sector is gathering. “There is a new attitude in the antitrust division,” as Attorney General Holder explained at the Alabama workshop in May. “Everyone should understand. There is no hesitancy on the part of this antitrust division, in this administration, to take action where we think it is needed.

“This antitrust division is open for business again.”

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