Antitrust and Agriculture
Author | Christopher L. Sagers |
Pages | 207-229 |
207
CHAPTER XI
ANTITRUST AND AGRICULTURE
American agriculture policy has long struggled to balance the
interests of small producers against the interests of consumers.
1
On the
one hand, Congress has sought to support producer profits, primarily by
exempting some collective operations and marketing from antitrust.
Congress did so first in the Clayton and Capper-Volstead Acts early in
the 20th century, and somewhat later in the Depression-era Agricultural
Marketing Agreement Act (AMAA).
2
These statutes have generated a
substantial amount of litigation and policy debate.
3
Congress has also
sought to modify marketing and the organization of production, with the
goal of giving farmers a larger share of the revenue their products earn,
without raising prices. Congress has pursued that goal by encouraging
1
. Protection of farmers and ranchers finds its early roots during the
American i ndustrial revol ution, i n the Granger and Alliance movements
of the 1870s. See W ILLARD COCHRANE, THE DEVELOPMENT OF
AMERICAN AGRICULTURE: A HISTORICAL ANALYSIS 93-95 (2d ed. 1993).
2
. See parts XI.B and XI.C of this chapter.
3
. The great bulk of antitrust litigation against cooperatives, both before and
after the adoption of the Cap per-Volstead Act, has targeted farm
cooperatives engaged in the marketing of agricultural products.
Cooperatives that provide group purchasing for inputs such as seed,
fertilizer, and pesticid es, have rarely been the object of attack, despite
their lack of antitrust exemption. One excep tion is Bell v. Fur Breeders
Ag. Co-op., 348 F.3d 1224 (10th Cir. 2003) (dismissing on Capper-
Volstead and Clayton Act, § 6, grounds a challenge to pricing practices
concerning purchasing of mink feed by a cooperative). The application of
the Capper-Volstead Act exemption does not seem to have bee n contested
in this case, although sale s of supplies to farmers are not within the scope
of the Capper-Volstead Act exemption even if t he cooperative also
engaged in the sale of agricultural products to which the Capper-Volstead
Act would apply. But supply cooperatives that fit the Clayton Act
requirements could, in any event, claim that exemption.
A Handbook on the Scope of Antitrust
208
more efficient marketing and forward integration by producers into
processing and distribution.
4
A. The Policy Problem and Evolution of the Statutory Framework
Farmers have used a variety of collective self-help efforts over the
years, some of which Congress has exempted and some not. Some are
more problematic than others from the perspective of contemporary
antitrust policy.
Congress originally rejected Sherman Act exceptions for labor and
agricultural collaborations, believing them unnecessary.
5
However,
following several successful challenges to unions and state law actions
against agricultural cooperatives,
6
Congress first exempted the
cooperatives in Clayton Act section 6.
7
Because section 6 proved
disappointing to many members of Congress, in failing to exempt some
cooperatives
8
and in failing to empower them effectively to combat the
4
. Among those statutes were the Grain Standards Act, ch. 313, 39 Stat. 4 82
(1916) (codified, as amended, at 7 U.S.C. §§ 71-87K); the Commodities
Exchange Act, ch. 369, 42 Stat. 998 (1922) (codified, as amended, at 7
U.S.C. §§ 1-27f); the Packers and Stockyards Act, ch. 74, 42 Stat. 159
(1921) (codified, as a mended, 7 U.S.C. §§ 181-231); and the Agricultural
Fair Practices Act, P ub. L. 90-288, 82 Stat. 93 (1968) (codified, as
amended, at 7 U.S.C. §§2 301-06).
5
. The 1 890 Congress believed the law would not apply to such
organizations, see U.S. DEP’T OF JUSTICE, REPORT OF THE TASK GROUP
ON ANTITRUST IMMUNITIES (1977) [hereinafter DOJ REPORT]; DONALD
FREDERICK, RURAL BUS. COOP. SERV., U.S.D.A., ANTITRUST STATUS OF
FARMER COOPERATIVES: THE STORY OF THE CAPPER VOLSTEAD ACT 25-
27 (2002), a vailable at www.rurdev.usda. gov/rbs/pub/cir59.pdf, and
indeed, prior to the adoption of the Clayton Act, there were no antitrust
challenges to agricultural cooperatives under t he Sherman Act. Id. at 68-
70. But see Steers v. United States 192 F. 1, 9-10 (6th Cir. 1911) (antitrust
law ap plied to “night riders” who sought to enforce boycott of tobacco
buyers by coercive means).
6
. Labor unions were subject to several successful antitrust challenges
before 1914. See, e.g., Loewe v. Lawlor, 208 U.S. 274 (1908). For review
of the state law cases against agricultural cooperatives, se e FREDERICK,
supra note 5, at 67-71.
7
. Clayton Act § 6, 15 U.S.C. § 17.
8
. Section 6 was limited to “labor, agricultural, or horticultural organizations
. . . not having capital stock or conducted for profit.” 15 U.S.C. § 17. It
did not apply to the increasing numbers o f cooperatives organized in
corporate form with equity o wnership. Moreover, the exemption applied
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