Regulated Industries
| Author | Ronan P. Harty |
| Pages | 1453-1711 |
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CHAPTER 14
REGULATED INDUSTRIES
A. Agriculture
1. Introduction
Concern about the economic well-being of farmers and ranchers has been a factor
in passage of most major U.S. antitrust legislation. Historically, farmers and ranchers
have been particularly vulnerable to the effects of concentration of market power by
suppliers, processors, and transporters, and have sought legislative assistance. In
addition to the general antitrust laws, there are two areas of legislation specifically
directed to competition in the agricultural sector. First, under the Capper-Volstead Act,
agricultural cooperatives are not illegal combinations for purposes of the antitrust laws,
and members of cooperatives are permitted to act in concert with one another in
preparing and marketing their products.1 Second, the livestock, meat, and poultry
industries are subject to the provisions of the Packers and Stockyards Act of 1921
(PSA) that prohibit anticompetitive behavior by meat packers, swine contractors,
poultry dealers, stockyards, marketing agents, and dealers.2
Notwithstanding this existing legislation, the high level of concentration in several
parts of the agricultural sector (including meat packing, grain trading, and
transportation), the accelerating pace of agribusiness mergers, and the generally poor
economic condition of smaller farmers and ranchers spurred calls for more
comprehensive regulation of merger activity in this sector.3 In response, the Antitrust
Division of the Department of Justice (DOJ), the Federal Trade Commission (FTC),
and the Department of Agriculture (USDA) entered into a memorandum of
understanding in 1999 providing that the agencies would coordinate and confer on
issues relating to competitive conditions in the agricultural marketplace.4 In addition,
in January 2000, the Special Counsel for Agriculture position was created within the
DOJ to “help look out for the interests of farm families, rural communities and
consumers.”
1. See part A.2.a of this chapter for a discussion of agricultural cooperatives.
2. See part A.2.b of this chapter for a discussion of the PSA.
3. See part A.3 of this chapter for a discussion of agriculture mergers, acquisitions, and joint ventures.
4. Memorandum of Understanding between the Antitrust Division, Department of Justice, the Federal
Trade Commission, and the Department of Agriculture Relative to Cooperation with Respect to
Monitoring Competitive Conditions in the Agriculture Marketplace (Aug. 31, 1999), available at
http://www.usdoj.gov/atr/public/guidelines/3675.htm. The memorandum provides that the three
agencies will confer regularly and share information consistent with applicable confidentiality
restrictions. Id. ¶¶ 3, 4. The memorandum also provides that each of the three agencies shall
designate a primary contact person to facilitate communications. Id. ¶ 3.
1454 ANTITRUST LAW DEVELOPMENTS (NINTH)
In 2010, the USDA and DOJ engaged in a series of joint workshops to discuss
competition in the agriculture industry.5 In 2012, the DOJ issued a report discussing
themes from the workshop, including mergers, market concentration, monopsony
power, prices, lack of capital, contracting, market transparency, captive supply, market
manipulation, and genetically modified seeds.6 The DOJ expressed its commitment to
conducting investigations and taking enforcement action against conduct threatening
harm to competition in agricultural markets, but noted that its enforcement powers do
not reach all of the concerns discussed at the workshops.7
More recently, the DOJ filed a statement of interest addressing the scope of Capper-
Volstead in private litigation against the country’s largest dairy cooperative.8 In the
statement, the DOJ argued that Capper-Volstead immunity should be interpreted
narrowly and not “as a shield insulating monopsonies from the antitrust laws.”9
In a May 2020 Business Review Letter in response to a request from the National
Pork Producers Council, the DOJ stated that it would not challenge efforts from the
nation’s largest association of hog farmers to humanely euthanize unmarketable hogs
in the wake of the COVID-19 pandemic.10
2. Regulatory Framework
a. ANTITRUST IMMUNITY FOR AGRICULTURAL COOPERATIVES
Congress has enacted a series of statutes granting agricultural producers the right
to combine into associations and to engage in cooperative functions without violating
the antitrust laws. From its inception in 1914, the Clayton Act has provided:
Nothing contained in the antitrust laws shall be construed to forbid the existence and
operation of . . . agricultural or horticultural organizations, instituted for the purposes of
mutual help, and not having capital stock or conducted for profit, or to forbid or restrain
individual members of such organizations from lawfully carrying out the legitimate
objects thereof; nor shall such organizations, or the members thereof, be held or
construed to be illegal combinations or conspiracies in restraint of trade, under the
antitrust laws.11
5. An overview of the workshops is available at http://www.justice.gov/atr/public/workshops/
ag2010/#overview.
6. See U.S. DEP’T OF JUSTICE, COMPETITION AND AGRICULTURE: VOICES FROM THE WORKSHOPS ON
AGRICULTURE AND ANTITRUST ENFORCEMENT IN OUR 21ST CENTURY ECONOMY AND THOUGHTS
ON THE WAY FORWARD (May 2012), availa ble at http://www.justice.gov/atr/
public/reports/283291.pdf.
7. Id. at 15-16. The report states that, as a result of the workshops, “the Division has redoubled its
efforts to prevent anticompetitive agricultural mergers and conduct,” but also observes that the
antitrust laws do not empower courts to engineer an economic landscape of small farms and ranches
and modest-sized local grain elevators and packers, or to control price volatility that results from
market forces and not from anticompetitive practices.
8. Statement of Interest on Behalf of the United States, Sitts v. Dairy Farmers of Am., Inc., 2020 U.S.
Dist. LEXIS 111144 (D. Vt. July 27, 2020), available at https://www.justice.gov/atr/case-
document/file/1298411/download.
9. Id. at 4.
10 Letter from Makan Delrahim, Assistant Att’y Gen., U.S. Dep’t of Justice, Antitrust Div., to Martin
M. Toto, White & Case LLP, re National Pork Producers Council Business Review Request Pursuant
to COVID-19 Expedited Procedure, U.S. Dep’t of Justice (May 15, 2020), available a t
https://www.justice.gov/opa/press-release/file/1276971/download.
11. 15 U.S.C. § 17. The legislative histories of the Clayton Act § 6 and the Capper-Volstead Act, 7
U.S.C. §§ 291-292, are discussed in Maryland & Virginia Milk Producers Ass’n v. United States,
362 U.S. 458, 464-67 (1960), and Fairdale F arms v. Yankee Milk, Inc., 635 F.2d 1037, 1040-44 (2d
REGULATED INDUSTRIES 1455
In 1922, Congress expanded the cooperative exemption by enacting the Capper-
Volstead Act,12 which provides:
Persons engaged in the production of agricultural products as farmers, planters,
ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or
otherwise, with or without capital stock, in collectively processing, preparing for
market, handling, and marketing in interstate and foreign commerce, such products of
persons so engaged. Such associations may have marketing agencies in common; and
such associations and their members may make the necessary contracts and agreements
to effect such purposes [subject to specified limitations on the organizational structure
of the cooperative].13
Section 2 of the act, however, authorizes the Secretary of Agriculture to proceed
against cooperative associations that have monopolized or restrained trade “to such an
extent that the price of any agricultural product is unduly enhanced.”14 This
authorization is not exclusive and will not deprive the federal courts of subject matter
jurisdiction where the Secretary does not initiate proceedings.15
Additional statutory exemptions have followed. The Cooperative Marketing Act of
1926 authorizes agricultural producers and associations to acquire and exchange “past,
present and prospective” pricing, production, and marketing data.16 Internal payments
by cooperatives to their members are exempt from the Robinson-Patman Act.17 The
Agricultural Marketing Agreement Act of 1937 grants an exemption from the antitrust
laws for marketing agreements between the Secretary of Agriculture and processors,
producers, associations of producers, and others engaged in the handling of any
agricultural commodity or product.18 The Agricultural Fair Practices Act of 1967
Cir. 1980). See generally Tigner v. Texas, 310 U.S. 141 (1940). The court in Tigner summarized the
agricultural exemption legislation as based on “a conception of price and production policy for
agriculture very different from that which underlies the demands made upon industry and commerce
by antitrust laws.” Id. at 145-46 (footnote omitted).
12. 7 U.S.C. §§ 291-292. In 1934, fishermen were also granted the right to form cooperatives by the
Fisherman’s Collective Marketing Act, 15 U.S.C. §§ 521-22, which was patterned after the Capper-
Volstead Act.
13. 7 U.S.C. § 291. The Third Circuit has held that while the Capper-Volstead Act provides an
exemption from some provisions of the antitrust laws (which can be characterized as “immunity
from liability”), it does not provide “immunity from civil suit,” and thus a district court order denying
the protections of the act is not a collateral order subject to interlocutory review. In re Mushroom
Direct Purchaser Antitrust Litig., 655 F.3d 158, 167 (3d Cir. 2011).
14. Id. § 292.
15. United States v. Borden, 308 U.S. 188, 206 (1939) (“We find no ground for saying that this limited
procedure is a substitute for the provisions of the Sherman Act, or has the result of permitting the
sort of combinations and conspiracies here charged unless or until the Secretary of Agriculture takes
(1960); Edwards v. National Milk Producers Fed’n, 2012 U.S. Dist. LEXIS 100513 (N.D. Cal.
2012).
16. Id. § 455.
17. 15 U.S.C. § 13b; 7 U.S.C. § 207(f).
18. 7 U.S.C. § 608b; see, e.g., United States v. Rock Royal Coop., 307 U.S. 533 (1939); In re Midwest
Milk Monopolization Litig., 380 F. Supp. 880, 885 (W.D. Mo. 1974) (limiting exemption to
marketing agreements and not marketing orders); Ice Cream Liquidation, Inc. v. Land O’Lakes, Inc.,
253 F. Supp. 2d 262 (D. Conn. 2003) (following Midwest Milk). But see Chiglades Farm v. Butz,
485 F.2d 1125, 1131 (5th Cir. 1973) (exemption also applies to marketing orders). See genera lly
Berning v. Gooding, 820 F.2d 1550, 1552 (9th Cir. 1987) (administrative committee not liable under
Clayton Act for its recommendations to Secretary of Agriculture pursuant to Agricultural
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