Bill Northey, IA Ag Sec’y, sounds a bit like an economist (ah, turns out he has a degree in ag business and an MBA . . . ). Yes, price of seeds has gone up, but so has yield, and so has overall value. The issue, he says, is how to divide the surplus, and he suggests that it’s dividing the pie that drives farmer concerns. That’s not at all a surprise, but it’s also not much of an antitrust issue. Unless the pie could be bigger absent, say, Monsanto’s huge investment in seeds and the resulting relatively-concentrated market structure (and basing enforcement on the theoretical possibility of that counter-factual is a perilous enterprise, as Josh and I have suggested many times), this is just a question of pecuniary transfers. Sure, they matter a lot to the parties involved and there’s always an incentive to deputize the government to put a thumb on the scale of that dispute, but that’s not a matter of allocative efficiency, and not a matter for the antitrust laws.
Now we hear Iowa AG Miller pushing for the development of “the non-antitrust laws to deal with concentration.” By which he means the Packers and Stockyards Act. Maybe the DOJ has their Section 5 after all!
As if on cue, AG Miller trots out the pendulum story of antitrust enforcement–“how to bring the antitrust law back to the middle.” This is not really an accurate description, unfortunately. Even worse, it’s not an economically-sensible concept, and measuring the efficiency of antitrust enforcement by counting enforcement actions (or looking at rhetoric) is usually just flimsy cover for an essentially-political determination. Combine that with Miller’s suggestion that the P&S Act’s “unfair practices” language should be enlisted in the service of dealing with concentration, and the risk of false positives is much magnified. Which, of course, is a perfect lead-in for Christine Varney.Varney:
“Biotech: Patents have been used to maintain or extend monopolies. We will look very closely at any attempt to maintain or extend a monopoly through the patent laws.”
“What can antitrust really do? When we see mergers, we look closely at the resulting concentration from a merger [she mentions the depradations of Dean Foods. I really need to blog on that case . . . ]”
“We will continue to scrutinize every merger that comes before us. Those mergers that don’t increase efficiency, we will stop. They will not go through in this administration.”
“Big is not bad, but with big comes an awful lot of responsibility.”
“When you have large market share, you must engage in behavior that keeps markets open. You cannot engage in conduct to maintain or extend your monopoly.” [No–there is no such thing as false positives].
“We have criminal authority, and it is illegal for competitors to sit down together to fix prices. We will, wherever we find price fixing, prosecute that criminally.”
“Make sure everyone’s making a decent wage and consumers have food on the their tables that is safe and healthy at a decent price.”
Holder sums up by saying “our overriding concern at the DOJ is fairness.” He’s probably telling the truth–and that’s the problem. Varney finishes her remarks talking about decent wages and healthy food. “Decent” and “healthy” are not antitrust-relevant concepts, and the antitrust laws don’t really contemplate their protection.
This is why this event is so problematic–and so politicized. You can’t talk about farmers in the US without talking about these things, but you shouldn’t be talking about these things when talking about antitrust. And when the AAG for antitrust suggests that concentration may threaten these attributes in a way that antitrust should address, alarm bells go off. And although the courts should be a bulwark against this–and someone here even mentioned that the jurisprudence might present a problem for the effort–there are errors, and there are ways around the courts (Section 5 of the FTC Act, and now, apparently, the Packers and Stockyards Act).