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DEPARTMENT OF JUSTICE
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Antitrust Enforcement and Agriculture
Address by
DOUGLAS ROSS
Special Counsel for Agriculture
Antitrust Division
U.S. Department of Justice
Before
American Farm Bureau Policy Development Meeting
Kansas City, Missouri
August 20, 2002
I appreciate the opportunity to discuss the role that the antitrust laws play in
the agricultural marketplace. In recent years, agricultural producers and others
have expressed concern about competitive conditions, about levels of
concentration, and about the impact on farmers of particular mergers and
acquisitions. We take those concerns very seriously. We know that the
agricultural marketplace is undergoing significant changes, including major
advances in technology and productivity, an increasingly global marketplace,
changes in business relationships between producers and their packers or
processors, and in many sectors, a trend toward consolidation or vertical
integration. I know you are continuing to develop and refine policy positions for
consideration by your full membership, and I hope a description of agriculture-related enforcement activity at the Antitrust Division will be useful to you.
I. Introduction
By any measure, the Antitrust Division has been spending a significant
amount of time, energy, and resources on agricultural issues in the past several
years. When warranted by the facts, our efforts result in enforcement actions, a
few of which I will describe shortly. Antitrust Division officials have also traveled
to various places around the country to meet personally with producer groups, and
have met and spoken with individual producers and farm organizations and
testified at hearings in Washington and in the field, to hear producers' concerns
directly and to improve everyone's understanding of how the antitrust laws operate
and how the Division works to protect competition under them. Since taking over
as Assistant Attorney General in June 2001, Charles James has maintained the
Division's focus on this sector of the economy.
There are three basic kinds of violations of the antitrust laws. First, the
antitrust laws prohibit conspiracies to suppress competition. Second, they prohibit
the use of predatory or exclusionary conduct to acquire or hold onto a monopoly.
Third, they prohibit mergers that are likely to substantially lessen competition in a
market. The ultimate goal in each instance is to promote competition to ensure that
consumers get the benefit of competitive prices, innovation, and efficiency, free
from artificially imposed restraints. I will describe each of these types of
violations in a little more detail in a minute.
The antitrust laws apply in the same way in every industry, with a very few
exceptions where their application is limited by specific statute; an exception
important for agriculture is the Capper-Volstead Act, which permits agricultural
producers to market their produce jointly through cooperatives. A number of
industries are also regulated by government agencies under statutes that go beyond
the antitrust laws to establish additional, industry-specific rules for appropriate
behavior in the marketplace; for example, the livestock, meat-packing, and poultry
industries are regulated by USDA's GIPSA. When I talk about the antitrust laws, I
mean the laws that we enforce at the Antitrust Division -- the Sherman and Clayton
Acts. I do not include the Packers and Stockyards Act, which is enforced by
GIPSA rather than by DOJ.
While we often speak of consumers as the targeted beneficiary of antitrust
enforcement, producers also benefit, by having healthy incentives to provide the
best products and services they can, with the expectation that they will be able to
do so free from anticompetitive interference. And the overall U.S. economy
benefits, as the products and services desired by consumers are produced more
efficiently, in greater quantities, and at competitive market prices.
In this regard, let me emphasize that we do look at so-called "monopsony"
concerns -- the potential for sellers to be harmed by anticompetitive conduct or
mergers at the buyer side. If buyers obtain market power through merger or
restrain trade, and thereby depress prices for the inputs they purchase below
competitive levels, producers of those inputs will have depressed incentives to
produce, which will result in reduced quantities of those inputs available for
consumers compared to what would be available in a competitive market. So a
focus on promoting competition as our guiding principle is entirely compatible
with our taking enforcement action in a monopsony case when the facts warrant.
We are very much aware of the trends toward increasing concentration in
some agricultural sectors. In particular, the steer-heifer side of the cattle slaughter
market has been highly concentrated for some time, with four meatpacking firms
now controlling over 80 percent of the market. Lamb slaughter is also quite
concentrated. Hog slaughter, and processing for crops such as corn, wheat, and
soybeans, are also moderately concentrated, at least at the national level, and may
be more concentrated in some local areas. High concentration in a market is not in
and of itself a violation of the antitrust laws. On the other hand, a high level of
concentration increases the potential for antitrust scrutiny. It is an important
backdrop in all of our analyses.
II. What the Antitrust Laws Prohibit
A minute ago, I referred to three different types of antitrust violations. Let
me state them more specifically. First, it is a violation of section 1 of the Sherman
Act for separate firms to agree among themselves not to compete with each other,
but instead to join forces against consumers or suppliers. Second, it is a violation
of section 2 of the Sherman Act for a firm to monopolize or attempt to monopolize
a market. Third, it is a violation of section 7 of the Clayton Act for a firm to merge
with another firm or acquire its assets if to do so would be likely to substantially
lessen competition in any market. I'd like to describe each of these types of
violations in a little more detail, and discuss some of our enforcement actions, to
give you a better idea of how these violations come up in practice.
A. Collusion
The first type of antitrust violation, when firms that are holding themselves
out to the public as competing against each other instead agree with each other to
unreasonably restrain competition among themselves, is often referred to as
collusion. Collusion is a willful subversion of the normal operation of free
markets, and can result in serious harm to consumers, suppliers, and the economy.
It virtually always results directly in inflated prices to consumers and denial of
choices in the marketplace; indeed, that is its purpose. The most common types of
collusion are agreements to fix prices, agreements to allocate markets, and
agreements to boycott particular customers, suppliers, or competitors.
Price fixing can include agreeing on the specific price, or rigging a specific
bid, but it can also include agreeing to increase or depress price levels, or agreeing
to follow a formula that has the intended effect of raising or depressing prices or
price levels. Allocation of markets can include agreeing to divide up geographic
areas to avoid competition, or agreeing to divide up customers or suppliers within
an area, or agreeing to divide up a sequence of bids. Group boycotts can include
any agreement among competitors that they will deal with their customers or their
suppliers only on particular terms in order to suppress competition.
It is important to remember that with any of these forms of collusion,
proving a case requires evidence of an agreement among competitors. It is not
enough, for example, just to show that two buyers or sellers offer similar or
identical prices, or that they habitually go to different locations to buy or sell.
Price-fixing and other forms of collusion are often subject to criminal
prosecution, with stiff fines and prison sentences. Let me describe a few of our
recent prosecutions in the agricultural sector.
1. Lysine. The first I'll describe is our prosecution beginning in 1996 of
Archer Daniels Midland and others for participating in an international cartel
organized to suppress competition for lysine, an important livestock and poultry
feed additive. The cartel had inflated the price of this important agricultural input
by tens of millions of dollars during the course of the conspiracy. ADM pled
guilty and was fined $100 million -- at the time the largest criminal antitrust fine in
history. Two Japanese and two Korean firms also were prosecuted for their
participation in the worldwide lysine cartel and were assessed multi-million dollar
fines. In addition, three former ADM executives were convicted for their personal
roles in the cartel; two of them were sentenced to serve 36 and 33 months in
prison, respectively, and fined $350,000 apiece for their involvement, and the other
executive had 20 months added to a prison sentence he was already serving for
another offense.
2. Vitamins. The next prosecution I'll describe is our 1999 prosecution of
the Swiss pharmaceutical giant, F. Hoffmann-La Roche Ltd., and a German firm,
BASF Aktiengesellschaft, for their roles in a decade-long worldwide conspiracy to
fix prices and allocate sales volumes for vitamins used as food and animal feed
additives and nutritional supplements. The vitamin conspiracy affected billions of
dollars of U.S. commerce. Hoffmann-La Roche and BASF pled guilty and were
fined $500 million and $225 million, respectively. These are the largest two
antitrust fines in history -- in fact, the $500 million fine is the largest criminal fine
ever imposed in any Justice Department proceeding under any statute. Six former
executives from the two firms agreed to submit to U.S. jurisdiction, to plead guilty,
to serve time in a U.S. prison, and to pay substantial fines for their roles. This
investigation has resulted in 24 corporate and individual prosecutions to date,
including convictions against Swiss, German, Canadian, Japanese, and U.S. firms,
and convictions of 11 American and foreign executives who are serving or have
served time in federal prison and another executive who received two years'
probation; another executive agreed to plead guilty and is awaiting sentencing.
3. Monochloroacetic Acid & Sodium Chloroacetate ("MCAA"). The
third prosecution I'll describe is our prosecution beginning in June 2001, under
AAG James's leadership, charging Dutch chemical company Akzo Nobel
Chemicals BV, along with an Akzo Nobel executive of Swedish citizenry, with
participating in an international price fixing and market allocation scheme
involving the chemicals monochloroacetic acid and sodium chloroacetate --
collectively MCAA -- which are used to produce herbicides among other things.
The United States consumes $50 million of these chemicals annually. The
company pled guilty and agreed to pay a $12 million criminal fine, and the
company executive, Erik Anders Broström, was sentenced to three months in
federal prison and a $20,000 fine. In March of this year, French-based chemical
conglomerate Elf Atochem S.A. pled guilty to participating in the same scheme
and agreed to pay fines totaling $8.5 million. An Elf Atochem executive also pled
guilty, and agreed to serve 90 days in federal prison and pay a $50,000 fine, and
two weeks ago another Elf Atochem executive pled guilty and agreed to the same
sentence.
4. Nebraska Cattle Procurement. On a smaller scale, we also successfully
prosecuted two cattle buyers in Nebraska a few years ago for bid-rigging in
connection with procurement of cattle for a meat packer, after an investigation
conducted with valuable assistance from the Department of Agriculture, which was
investigating some of the same conduct under the Packers and Stockyards Act.
This case differed from the others I've described in that the direct victims of the
conspiracy included agricultural producers in their role as sellers rather than as
consumers. While sellers generally do not figure prominently as victims of
collusion as often as buyers do, the somewhat unusual structure of the agricultural
marketplace -- with relatively more producers selling to relatively fewer packers
and processors -- presents more possibilities for sellers to be victims. And the
Antitrust Division keeps a lookout for violations of this kind and will prosecute
them when the facts warrant.
5. Other Potentially Anticompetitive Conduct. My summary a minute ago of the principal kinds of section 1 violations was
a bit of an oversimplification. There may be other kinds of violations in which the
anticompetitive intent and effect are less clear-cut. All section 1 violations share
the same basic characteristic, that firms who are supposed to be independent actors
in the marketplace are instead agreeing to join forces to restrain competition. But
in these less clear-cut situations, involving such things as strategic alliances, joint
ventures, and aggressive use of intellectual property rights, which also often have
legitimate business justifications, the law requires us to determine and prove that
the conduct is actually having a significant net anticompetitive effect -- what is
known as applying the "rule of reason" to the conduct in question. And in these
situations, when we do decide enforcement action is warranted, we proceed
through civil action rather than criminal prosecution, to stop the conduct but not to
punish the actors. In September 2000, for example, the Antitrust Division filed
suit to challenge a non-compete agreement between developers of long-shelf-life
tomato seeds because we concluded that the agreement was interfering with the
development of new seeds for use by American farmers. The trial court has
dismissed our complaint, but we are appealing the court's ruling.
6. Capper-Volstead. Let me return to the Capper-Volstead Act for a
minute. As I mentioned, this law allows producers of agricultural commodities to
form processing and marketing cooperatives -- in effect to engage in joint selling at
a price agreed to by the producer members of the co-op -- subject to certain
limitations enforced in the first instance by USDA. There have been efforts in
recent years by some cattle producers to organize cooperatives to slaughter and
process their own beef for the wholesale market. Not only would such a
cooperative, or a similar one in another agricultural commodity, most likely be
protected under the Capper Volstead Act; but if established packers or processors
attempted to drive it out of business by cutting off access to transportation or to
wholesale markets, that would raise serious antitrust issues and we would certainly
want to investigate.
B. Monopolization or Attempt to Monopolize
Let me now turn to the second type of antitrust violation, monopolization or
attempt to monopolize. This might occur, for example, by a packer or processor
with a monopoly attempting to drive rival packers or processors out of business by
illegally interfering with their ability to engage in the business. Under section 2 of
the Sherman Act, it is not necessary to prove an agreement among two or more
firms. One firm can illegally monopolize by itself.
But it is important to understand how rarely we see a true case of
monopolization. Monopolization means more than just that a firm has engaged in
restrictive conduct. The law also requires that the firm have a monopoly -- and that
means an extremely high market share all to itself -- and that it engaged in the
restrictive conduct in order to acquire or maintain the monopoly. Or, in the case of
attempted monopolization, the firm must stand a "dangerous probability" of
acquiring a monopoly as a result of the restrictive conduct. And for "dangerous
probability," the courts generally require, for starters, that the firm involved in the
restrictive conduct already have a quite large market share -- a 50-percent share for
a single firm might not be enough, a 60-to-70 percent share may be enough,
depending on the circumstances. That's not the four-firm combined share familiar
to agricultural producers from USDA publications and elsewhere; that's the share
for a single firm. And even a large market share might not be enough, if other
factors indicate that the restrictive conduct is unlikely to succeed in creating a
monopoly.
Just as important, section 2 monopolization means more than just that the
market is highly concentrated. Under our antitrust laws, a firm may lawfully have a
monopoly, as long as the firm has not acquired it or maintained it illegally. So both
things -- very high market share, plus restrictive conduct to exclude competition --
must be present. One or the other by itself is not enough.
I should also emphasize that monopolization requires demonstrating that the
conduct is harming competition, not just that it is disadvantaging rivals. It is quite
rare that we encounter it. And I don't have any recent cases to cite you in
agriculture. But if we ever did find it in agriculture we would take appropriate
enforcement action as warranted by the facts.
C. Anticompetitive Mergers
The third type of antitrust violation, a merger or acquisition that is likely to
substantially lessen competition in a particular product market and geographic
market in violation of the Clayton Act, has a different legal standard from the other
two in that it does not require proof of anticompetitive conduct that has already
occurred. Here, the principal focus is not on whether the merging parties have
engaged in wrongful conduct, but on whether the merger would change the market
structure to such a degree that competition would likely be substantially lessened.
The Clayton Act enables us to prevent anticompetitive mergers before they are
consummated, to prevent harm to the competitive market structure that would
otherwise result but would be difficult to fix after the fact. The remedy we seek for
a merger that violates the Clayton Act is to sue to stop the merger, or to insist that
it be modified to remove the cause for antitrust concern.
Merger reviews require a careful analysis of the markets involved. The
Antitrust Division analyzes mergers pursuant to Horizontal Merger Guidelines
developed jointly by the Department of Justice and the Federal Trade Commission,
with whom we share merger enforcement responsibility, except for certain
industries in which the FTC's jurisdiction is limited by statute.(1) The analysis is
aimed at determining whether the merger is likely to create or increase market
power, or to facilitate the exercise of market power, in any market. The Merger
Guidelines define market power as the ability of a seller or coordinating group of
sellers to profitably maintain prices above competitive levels for a significant
period of time, or the ability of a buyer or coordinating group of buyers to depress
prices below competitive levels and thereby depress output.
An important first step in analyzing a merger is to determine the scope of the
product markets and geographic markets that would be affected by it. Once we
know the size and shape of an affected market, we can then determine how big the
various firms' market shares are, and more accurately predict how that market
would be affected by the restructuring that would result from the merger. The
scope of a geographic market is generally defined by the smallest area in which a
hypothetical firm, assuming it faced no competition for its product in that area,
could make a small but significant change in price stick. Usually, we are looking
at that firm as a seller, and determining the smallest area within which the firm's
customers would be unable to thwart the firm's inflated pricing by going outside
that area to purchase -- unable to, that is, because it would be economically
impractical to travel to or receive shipments from outside that area. But, as our
Merger Guidelines expressly note, we also look at the firm as a buyer, and
determine the smallest area in which sellers to the firm would be unable to thwart
the firm's depressed prices by selling to others outside that area -- unable to, that
is, because it would be economically impractical to travel or ship outside that area.(2)
(Product markets are defined in a similar fashion, focusing on an array of products
rather than a geographic area in order to determine which products are close
enough substitutes for each other to be considered in the same market.)
A decision as to the dimensions of this area can sometimes be reached by
examining recent buying and selling patterns in the marketplace. But the decision
can also depend on a variety of other, more subtle factors, because the ultimate
question is not how far the buyers and sellers have traveled or shipped in the past,
but how far they could or would travel or ship in response to anticompetitive price
changes.
Once we have defined the market, we turn to the question of market
concentration and how it would be affected by the merger. There is no automatic
threshold of market concentration that will always result in a determination that a
merger would violate section 7 of the Clayton Act. Other factors also play an
important role in analyzing the impact of the merger such as other structural
features of the market that make anticompetitive effects more likely or less likely;
and the ease or difficulty of entry into the marketplace by new competitors who
could neutralize any anticompetitive potential.
But market concentration is the first factor we look at, because as a market
becomes highly concentrated, not only are price fixing and other collusion easier to
coordinate; there is also a dampening effect on competitive rivalry, even in the
absence of collusion.
I'll now briefly describe some recent merger challenges in the agriculture
sector.
1. Monsanto/DeKalb. The first one I'll describe is our 1998 challenge to
Monsanto's proposed acquisition of DeKalb Genetics Corporation. Both
companies were leaders in corn seed biotechnology and owned patents that gave
them control over important technology. We expressed strong concerns about how
the merger would affect competition for seed and biotechnology innovation. To
satisfy our concerns, Monsanto spun off to an independent research facility its
claims to agrobacterium-mediated transformation technology, a recently developed
technology used to introduce new traits into corn seed such as insect resistance.
Monsanto also entered into binding commitments to license its Holden's corn
germplasm to over 150 seed companies that currently bought it from Monsanto, so
so that they would be free to use it to create their own corn hybrids if they chose.
2. Cargill/Continental. In 1999 we challenged the proposed acquisition by
Cargill of Continental's grain business, which would have significantly reduced
competition in the purchase of grain and soybeans from farmers in a number of
local and regional markets. The parties were buyers of grain and soybeans in
various local and regional domestic markets, and also sellers of grain and soybeans
in the United States and abroad. We carefully looked at all of the potentially
affected markets and ultimately concluded that the proposed merger could have
depressed prices received by farmers for grain and soybeans in a number of regions
of the country; we were also concerned that the transaction could have had
anticompetitive effects with respect to certain futures markets.
Our written response to the public comments we received in this case gives a
good picture of the thoroughness with which the Division investigated all the
potentially affected markets and sought relief wherever we concluded that the
transaction was competitively problematic.(3)
A team of about 20 attorneys,
economists, and paralegals reviewed over 400 boxes of documents furnished by the
parties in response to formal requests we made; we deposed the parties' executives;
we consulted with officials of USDA, CFTC and state attorney general offices; and
we interviewed over 100 farmers, farm organization officials, agricultural
economists, grain company executives, and other individuals with knowledge of
the industry and competitive conditions.
To resolve our competitive concerns, Cargill and Continental agreed to
divest a number of facilities throughout the Midwest and in the West, as well as in
the Texas Gulf. A description of the relief we insisted upon illustrates the
individualized attention that we paid to local and regional markets. We insisted on
divestitures in three different geographic markets where both Cargill and
Continental operated competing port elevators: (1) Seattle, where their elevators
competed to purchase corn and soybeans from farmers in portions of Minnesota,
North Dakota, and South Dakota; (2) Stockton, California, where the elevators
competed to purchase wheat and corn from farmers in central California; and (3)
Beaumont, Texas, where the elevators competed to purchase soybeans and wheat
from farmers in east Texas and western Louisiana.
We also required divestitures of river elevators on the Mississippi River in
East Dubuque, Illinois, and Caruthersville, Missouri, and along the Illinois River
between Morris and Chicago, where the merger would have otherwise harmed
competition for the purchase of grain and soybeans from farmers in those areas.
The Illinois River divestitures (and an additional required divestiture of a port
elevator in Chicago) also prevented the merger from anticompetitively
concentrating ownership of delivery points that have been authorized by the
Chicago Board of Trade for settlement of corn and soybean futures contracts.
In addition, we required divestiture of a rail terminal in Troy, Ohio, and we
prohibited Cargill from acquiring the rail terminal facility in Salina, Kansas, that
had formerly been operated by Continental, and from acquiring the river elevator
in Birds Point, Missouri, in which Continental until recently had held a minority
interest, in order to protect competition for the purchase of grain and soybeans in
those areas.
This relief was designed to ensure that farmers in the affected markets would
continue to have alternative buyers to whom to sell their grain and soybeans. In
this case, the focus of the competitive problem was the so-called "monopsony"
concern -- that is, that the merger would harm producers as sellers.
3. Case/New Holland. Next I'll describe our 1999 challenge to New
Holland's proposed acquisition of Case Corporation, which would have
significantly reduced competition in the sale of tractors and hay tools to farmers.
The parties manufactured and sold four-wheel and large two-wheel drive tractors
(the Versatile and Genesis lines, respectively) that are used by farmers for a variety
of applications, including pulling implements to till soil and cultivate crops -- part
of the nation's $1.5 billion market for agricultural tractors. They also
manufactured and sold a variety of hay and forage equipment, including square
balers and self-propelled windrowers -- part of the $250 million U.S. market for
hay tools. We concluded that the transaction would significantly lessen
competition and lead to farmers having to pay higher prices and accept lower
quality for this essential equipment.
The parties agreed to significant divestitures in order to address our
concerns. Those divestitures included New Holland's large two-wheel-drive
agricultural tractor business, New Holland's four-wheel-drive tractor business, and
Case's interest in a joint venture that makes hay and forage equipment.
4. Monsanto/Delta & Pine Land. In late 1999, Monsanto abandoned its
proposed acquisition of Delta & Pine Land Co., after the Antitrust Division
advised that it was prepared to challenge the merger in court. The Antitrust
Division concluded that the merger, which would have combined the two largest
cotton seed companies, would have anticompetitively harmed farmers raising
cotton.
5. Suiza Foods/Dean Foods. Last December, after an extensive investigation, the Division required Suiza
Foods to change its originally proposed acquisition of Dean Foods in two
significant ways. First, we required Suiza to divest 11 milk processing plants in 8
states (Alabama, Florida, Indiana, Kentucky, Ohio, South Carolina, Virginia, and
Utah) to preserve competition in markets for milk sold at school and at other retail
outlets. Second, we required Suiza to modify its supply contract with the
cooperative Dairy Farmers of America Inc. (DFA), who would also own half
interest in National Dairy Holdings, L.P., the new firm to which the processing
plants were being divested, to ensure that dairies owned by the merged firm in the
areas affected would be free to buy their milk from sources other than DFA.(4)
Taken as a whole, these enforcement actions provide a good picture of our
merger enforcement efforts in agriculture-related industries. The Antitrust
Division carefully reviews agricultural mergers for their competitive implications,
and files suit if a merger is likely to lead to anticompetitive prices either for
products purchased by farmers (New Holland/Case) or for products sold by
farmers (Cargill/Continental). The Division's concerns are not limited to
traditional agricultural products, but extend also to biotechnology innovation
(Monsanto/DeKalb and Monsanto/ Delta & Pine Land). And, while the Antitrust
Division considers proposed divestitures and other forms of relief that permit a
merger to proceed as restructured (Cargill/Continental, Monsanto/DeKalb,
Case/New Holland, Suiza/Dean), the Division is prepared to challenge a merger
outright if it concludes that lesser forms of relief are not likely to address fully the
competitive problems raised by the merger (Monsanto/ Delta & Pine Land).
III. Coordination with USDA and Others
The Antitrust Division has a long-standing cooperative relationship with
USDA, through which we have provided assistance to each other in a number of
respects. Division attorneys and economists investigating particular mergers have
made extensive use of the wealth of information about agricultural markets that
USDA collects in the ordinary course of its work. USDA has also contacted the
Division to provide other useful information regarding major agriculture-related
mergers we were investigating, and has forwarded investigative leads to the
Division, such as the one resulting in the prosecution of the two cattle buyers in
Nebraska for price-fixing. The Division has assisted USDA by consulting on
studies USDA has conducted regarding competition-related aspects of agricultural
markets, such as the red meat studies a few years ago, as well as on USDA's recent
efforts to revise its investigative processes at the Grain Inspection, Packers and
Stockyards Administration.
In August, 1999, the Division entered into a memorandum of understanding
with USDA, along with the FTC, to memorialize this working relationship and to
reaffirm our commitment to work together and exchange information as
appropriate on competitive developments in the agricultural marketplace.
Last year Assistant Attorney General James designated the Assistant Chief
of the Chicago Field Office to be a special point of contact for USDA for criminal
matters. The Assistant Chief maintains regular contact with USDA's Office of the
General Counsel and Office of the Inspector General. In addition to receiving and
responding to inquiries and complaints from USDA relating to potential criminal
violations of the antitrust laws, the Assistant Chief conducts antitrust detection
training sessions for agents of USDA's Office of the Inspector General.
The Antitrust Division also works with other relevant federal agencies and
state attorneys general on specific matters of common interest. For example, the
Division worked closely with the Commodities Futures Trading Commission and
several states during the investigation of the Cargill/Continental merger.
IV. Role of Antitrust Division in the Agricultural Marketplace
Let me close with a few caveats about antitrust enforcement. The
responsibility entrusted to us as enforcers of the antitrust laws is not to design the
best possible structure for the marketplace. The antitrust laws are based on the
notion that competitive market forces should play the primary role in determining
the structure and functioning of our economy. Our job is to stop the specific kinds
of private-sector conduct I have been discussing from interfering with those market
forces.
We are law enforcers, not regulators. We do not have the power to
restructure any industry, any market, or any company, or to stop any practice,
except in a precise and focused fashion as necessary to prevent or remedy specific
violations of the antitrust laws that we can prove in court. Our authority rests
ultimately on our ability to bring enforcement actions in court, and when we bring
an action, it is the court that decides whether the antitrust laws are being violated in
the particular instance, and whether the remedy we are seeking fits the violation.
And the court's decision depends on the particular facts in evidence. Therefore,
we bring an enforcement action in court only when we are in possession of factual
evidence that gives us good reason to believe that there is an antitrust violation.
While the antitrust laws play an important role in helping keep markets
competitive, they are not going to, and should not be expected to, address all of the
complex issues facing American agriculture in this time of change. That is why the
government continues to focus on a broad range of agriculture policy issues.
Conclusion
Whenever I make a presentation such as this one about our work, I urge that
anyone who has any information that they think is relevant to our enforcement
activities to contact us. As a law enforcement agency, we treat conversations with
us in confidence. If the information leads us to conclude that the antitrust laws
have been violated, we will take appropriate enforcement action. The Antitrust
Division takes seriously its responsibility to protect the marketplace including
the agricultural marketplace against anticompetitive conduct and against mergers
that substantially lessen competition. As I hope I have made clear, the Division
has a record of acting in this important sector when the antitrust laws are violated.
FOOTNOTES
1. The Antitrust Division and the FTC use a clearance process to work out which agency
will review a particular merger. The primary determinant is agency expertise about the product
or service at issue, so that a merger will usually be reviewed by whichever of the two agencies is
most knowledgeable about the relevant product or service. As a result of this clearance process,
the Antitrust Division has investigated most of the mergers affecting agriculture, with one
prominent exception being grocery store mergers, which are usually investigated by the FTC.
2. Market power by a buyer is addressed by the Merger Guidelines under the same
analytical framework as a seller's market power that may result from a merger:
Market power also encompasses the ability of a single buyer (a "monopsonist"), a
coordinating group of buyers, or a single buyer, not a monopsonist, to depress the
price paid for a product to a level that is below the competitive price and thereby
depress output. The exercise of market power by buyers ("monopsony power")
has adverse effects comparable to those associated with the exercise of market
power by sellers. In order to assess potential monopsony concerns, the Agency
will apply an analytical framework analogous to the framework of these
Guidelines.
Merger Guidelines § 0.1.
3. The responses were published in the Federal Register at 65 Fed. Reg. 15982-16033
(3/24/00) and are posted on the Antitrust Division's website at http://www.usdoj.gov/atr/cases/
f4100/4172.htm.
4. For more information about the Suiza/Dean investigation, see the June 14, 2002 speech
by Deputy Assistant Attorney General William Kolasky, on our website at
http://www.usdoj.gov/atr/public/speeches/11304.htm.
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