Congress seeks investigation into beef price fixing

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Bipartisan resolution requires Federal Trade Commission to report within one year whether beef companies acted anticompetitively in current beef market.

“For the past two years, I have been calling on the Department of Justice to investigate allegations of price-fixing, collusion and other unfair practices in the beef packing industry. Unfortunately, the Department of Justice has seemingly not made these concerns a priority and both consumers and cattle producers in South Dakota continue to suffer as a result,” says Sen. Mike Rounds, R-S.D. Rounds is a lead sponsor of a new bipartisan joint resolution that would direct the Federal Trade Commission to report to Congress within one year on the extent of anticompetitive practices and violations of antitrust law in the beef packing industry, including price-fixing, anticompetitive acquisitions, dominance of supply chains and monopolization. 

The resolution, introduced with Sen. Elizabeth Warren, D-Mass., invokes a 1914 act that authorizes the president or Congress to direct the FTC to investigate alleged antitrust violations. The rule has not been used since the 1920s. 

In November 2021, President Biden used his authority under this law to call for an oil and gas investigation. However, Congress has not used its power under the FTC Act to call for an investigation since the Great Depression era. In the 1920s, Congress directed the FTC to investigate specific companies like American tobacco, as well as entire markets such as the flour industry. 

This bipartisan joint resolution would direct the FTC to report to Congress within one year on: the extent of anticompetitive practices and violations of antitrust law in the beef packing industry, including price fixing, anticompetitive acquisitions, dominance of supply chains and monopolization; the monetary and other harms of anticompetitive practices and violations of antitrust law in the beef packing industry on consumers, ranchers, farmers, plant workers and small businesses; and recommendations for legislation or other remedial actions.

“For years, the price paid to cattle producers for their high-quality American products has not followed the price of beef at the grocery store. Meanwhile, the four largest beef packers, who control 85% of the beef processing capacity, have enjoyed record profits,” Rounds says. “This has resulted in an average of nearly 17,000 cattle ranchers going out of business each year since 1980.”

Rounds says the bipartisan resolution introduced with Warren will address these issues. “If passed, it will trigger an existing statute that requires the FTC to investigate and report to Congress whether the big packers are engaging in anticompetitive practices, or even breaking antitrust laws, to maintain their stranglehold on the beef packing industry. It’s critical to determine if violations are occurring, or if Congress needs to take further action to strengthen the current antitrust laws that are on the books,” he says.

Corporations that control 85% of the market for beef “have been using their market power to raise prices for consumers and have reduced pay for ranchers, farmers, and plant workers, all while padding their bottom lines,” Warren says. “It’s time for Congress to get back in the game and use every tool to promote competition in our markets so we can lower costs for families.”

Support from some livestock groups

The bipartisan resolution is endorsed by the U.S. Cattlemen’s Association, R-CALF USA, South Dakota Farmers Union, South Dakota Stockgrowers Association, Groundwork Collaborative and Farm Action Fund. 

Justin Tupper, U.S. Cattlemen’s Association vice president, says the industry has not yet received the results of the Department of Justice’s investigation into the beef industry directed by former Secretary of Agriculture Sonny Perdue. “This is completely unacceptable. The bipartisan resolution introduced directs the Federal Trade Commission to examine the extent of anticompetitive practices and violations of antitrust law in the beef-packing industry and it sets a date for when the report is due,” Tupper explains.

“Fighting for our American rancher’s livelihood is an important priority,” says Karla Hofhenke, executive director of South Dakota Farmers Union. “The disparity between the packer and producer is a serious issue that has only gotten worse. Immediate action consisting of a thorough investigation followed by swift Congressional action is needed.”

"Fair and honest prices in a free-market economy are predicated on competition,” adds James Halverson, executive director of South Dakota Stockgrowers Association. “We’ve seen that competition dwindle to nearly non-existent levels within the beef industry. There are some who are doing quite well right now in our industry with deals behind closed doors, and they want the status quo to continue. The South Dakota Stockgrowers appreciate what the senators are trying to do with this resolution in putting a stop to the meat packing oligarchy collusion."

 

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