Between 1975-77, Neil Smith (U.S. Representative, IA, 1959-1994) held hearings of the U.S. House Small Business Committee to examine other countries' laws regulating packer ownership and concentration issues. Several countries assume that at a certain level of industry concentration, anti-competitive practices are unavoidable, and action to maintain competition must therefore follow immediately. The Committee found that Germany had a rule limiting packers from controlling more than 25 percent of the market. Smith later introduced the Meat Industry Act To Preserve Competition (HR 5733) in 1979, modeled on this standard (at this time the largest U.S. packer had 22 percent of the market). The theory was that at 25 percent, at least three competing companies would be forced to compete, with the remaining 25 percent comprised of smaller or specialty processors. While the law did not pass, it remains a model rule to automatically trigger anti-competitive enforcement action at a certain level of industry consolidation. A summary of the law appears below.

Meat Industry Act To Preserve Competition - H.R.5733
Introduced by Rep. Neil Smith, 10/29/79

SUMMARY:

(AS INTRODUCED)

Meat Industry Act To Preserve Competition - Declares that it is the policy of this Act to prevent, and as rapidly as possible to eliminate, marketing conditions in the livestock production, processing, and meat packing industries which are detrimental to the maintenance of a free and competitive environment needed for the health, efficiency, and general well-being of business.

Requires any packer whose slaughter or processing of certain classifications of livestock or meat products exceeds specified minimum levels to file with the Secretary of Agriculture on February 1 of each year information for each plant owned or operated by such packer regarding the number by month of: (1) steers and heifers, cows and bulls, and hogs purchased or acquired for slaughter during the preceding calendar year; (2) such livestock classifications slaughtered by such packer, or for or on behalf of such packer by another under any custom slaughtering arrangement, during such preceding year; (3) carcasses of such classifications of livestock purchased or acquired from any other person or packer during such period; (4) pounds of boxed beef and pounds of centrally cut beef produced, purchased, or acquired during such period.

Requires the Secretary to compile the information provided by such reports and on March 1 of each year publish the total number identified by plant and by State of each classification of livestock and meat product, and to aggregate such totals per State into national totals for each classification.

Establishes criminal penalties for failure to file such reports or for the filing of fraudulent reports. Authorizes the Secretary to suspend all inspection and all grading services at any plant owned or operated by a packer guilty of any such violations.

Prohibits any packer from slaughtering, or contracting for the custom slaughter of, or purchasing carcasses of more than 25 percent of the currently published national slaughter for any classification during any calendar year. Prohibits any packer, during any such year, from producing, processing, purchasing, or acquiring, either directly or indirectly, more than 25 percent of the currently published national boxed beef production, or 25 percent of the currently published national centrally cut beef production.

Prohibits any packer required to file a report, who meets certain criteria, from slaughtering in the United States more than 30 percent of any concentrated State's portion of the currently published national slaughter for any classification. States that any plant owned or operated by a packer within 100 miles of the border of a concentrated State shall be counted for such purposes. Limits such prohibition to any packer who during any reporting period owns or operates three or more plants, or who slaughters during such period more than five percent of the currently published national slaughter for any classification.

Prohibits any packer who has more than a five percent share of the currently published national slaughter for any classification, or national boxed beef production, or national centrally cut beef production, from owning, leasing, or operating any retail meat outlet in the United States.

Establishes criminal penalties for the violation of such prohibitions.