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US meat body rejects anti-competition concerns

By Rory Harrington , 11-Jan-2010
Last updated on 11-Jan-2010 at 14:51 GMT

US meat processors have dismissed proposals that the industry needs unique anti-trust and competition regulation in the face of the growing trend of concentration of ownership within the sector.

The American Meat Institute (AMI) declared that calls to boost regulation of the meat industry were “ill-conceived and should not be implemented”. It said an increasingly stringent food safety regulatory system had forced many smaller players out of the industry.

The body was responding to a call from the US Department of Agriculture (USDA) and Department of Justice (DOJ) for comments on fears voiced by some agricultural producers that an increasing consolidation trend in US meat processing industry was causing “changes in the agricultural marketplace”.

Some have suggested that intensified anti-trust and competition regulations for the meat processing sector were necessary amid concerns that less competition among meatpackers meant they were able to drive down prices paid to producers, limit offerings and drive up prices charged to consumers. The issue will be debated at a series of public meetings hosted by the USDA.

Heightened food safety driving consolidation

But the AMI dismissed the need for greater oversight claiming the sector is already “one of the most intensely regulated industries in the economy”. Regulation and oversight have increased in the last two decades in response to new food safety issues, such as E. coli O157:H7 in beef and Listeria monocytogenes on ready-to-eat meat and poultry products, said the group in its submission to the DOJ.

Mark D. Dopp, AMI senior vice president of regulatory affairs and general counsel, said: “One could argue forcefully that the growing scientific knowledge base that leads to evolving food safety policies, and hence a much safer food supply, has also contributed to a more concentrated meat industry.”

He said that regulatory policies such as the 1994 declaration that E. coli O157:H7 in ground beef is an adulterant or the 1996 Hazard Analysis and Critical Control Point/Pathogen Reduction Final Rule had been responsible for a number of small and mid-sized family owned meat and poultry companies exiting the industry by “cashing out or merging with other larger, more diversified companies” in order to protect themselves.

Anti-trust laws

Wayne State University law professor Stephen Calkins said that antitrust laws such as the Sherman Act had been written so that they could be applied by courts to take account of changing economic conditions and particular facts. In the case of the meat industry, courts need flexibility to consider “the impetus for changes in market conditions like significant and beneficial new food safety regulations that prompt companies to protect against risk to ultimately survive or protect company assets”, said the AMI in summarising Calkins’ views.

The professor added that when faced with antitrust issues, the US legislature has generally increased funding for enforcement of existing rules rather than amending laws to impose higher standards on specific industries.

“The antitrust system is majestically general and fully capable of evolving as needed to reach right results,” said Calkins. “If wrong results are being reached, the last thing Congress should do is to draft industry-specific rules. Doing so is both unnecessary and harmful since it would remove part of the impetus for needed evolution in general standards.”

Panels

The AMI also said that panellists at the upcoming meetings should be experts and be divided into four categories: packers/processors; legal/antitrust attorneys; finance/banking; and economists and academicians.

Dopp said: “Agricultural competition policies regarding the livestock and meat sector should be founded on the same, fundamental antitrust principles that apply to the economy as a whole. The contemplation of antitrust or farm policy that deviates from this approach by favouring one sector over another or inhibiting or restricting a competitive market should be rejected.”