Varney's comments from the DOJ/USDA hearings [#dojusda #agworkshop]

Cite this Article
Geoffrey A. Manne, Varney's comments from the DOJ/USDA hearings [#dojusda #agworkshop], Truth on the Market (March 23, 2010),

The DOJ has posted the transcript from the recent DOJ/USDA hearings on antitrust in agriculture here.  I figured our readers might be especially interested in seeing Christine Varney’s comments (especially without having to slog through all 350 pages to find them!).  I have bolded some of the most interesting parts of her comments.

As a special bonus, at the end of this post, I also reprint some of the particularly choice comments on Chicago economics by one of the farmer panelists.  I leave it to readers to decide whether the juxtaposition has any deep meaning.  I will say this: Technological innovation, increasing economies of scale, shifts in international trade and its restraints, and demographic changes–among other things–have no doubt wreaked havoc on many small farmers and farm communities.  The same can be said of the buggy whip makers, Atari game system manufacturers, and polio hospital administrators, to name but a few.  It is probably impossible to separate the populist impulse to serve (or, for politicians, to appear to serve) the Jeffersonian farmer from the enforcement of the antitrust laws, and this is why antitrust in agriculture will continue to be so contentious and so problematic.

Do be sure to check out the farmer’s comments at the end of the post.

ASSISTANT ATTORNEY GENERAL CHRISTINE VARNEY: Thank you very much, Secretary. If I can start by addressing what the panelists asked they would like to see, and I can absolutely commit on behalf of myself and my boss, the attorney general, Senator Grassley, that you will continue to see the unprecedented cooperation and collaboration between our office and the USDA.

As a matter of fact, I have hired someone formerly from the state attorney general’s office in Texas, Mark Tobey who’s here today, who specializes in agriculture. I have a deputy assistant also here today, Phil Weiser, who specializes in agriculture. [News to me–and probably to him (although Phil is thoughtful enough and capable enough to handle any issues thrown his way -ed.] Bill Stallings who’s the lead of our agriculture enforcement team, a long-time career lawyer, is here in the back. So you have our commitment to work with all the folks that are here from USDA in an unrelenting quest to find the right balance for farmers, producers, consumers across the whole agriculture chain.  We’re going to do that in this administration.

To Congressman Boswell, market transparency. We care deeply about transparency — and lieutenant governor. We understand that transparency helps maintain a competitive marketplace. So you can be sure that we’re going to be working closely with USDA to figure out where our law, our jurisdiction, and their law and their jurisdiction overlap so that we can get as much transparency as is possible into the system.

Packer and Stockyard Act enforcement.  USDA has tremendous expertise here, but we got a lot of lawyers at DOJ that can back you up. So we’re looking forward to and have started the conversation at the staff level of how we can work collaboratively to ensure the federal government is taking full advantage of the authority that’s delegated to us in the Packer and Stockyard Act.

Biotech, things coming off patent.  You know, patents have in the past been used to maintain or extend monopolies, and that’s illegal, and you can be sure, Secretary, that we are going to be looking very closely at any attempt to maintain or extend a monopoly through an abuse of patent laws.

So that’s generally — I think I can assure each member of the panel — I’ve been working with Attorney General Miller for not quite 30 years but for a long time, and he knows that he can continue to count on the offices of the Department of Justice in the antitrust division to work across the board on issues as they confront the state attorneys general, not only in agriculture, but really, you know, you folks are on the front lines, and your attorneys general are the people that we look to to understand what is affecting you in your life every day and what’s our appropriate role to support the attorneys general or to collaborate with them, and we will continue to do that.

You know, I got here a few minutes early, so I was able to talk with a lot of folks that are here today. I got to talk with the Food and Commercial Workers for a while. I got to talk with a lot of farmers who are here. My friends from the co-ops are here.

And there’s a couple of things that I would say. You know, you touched on it a little bit. The first question was, you know, what can antitrust really do? Well, there’s a number of things. When we see mergers, we look closely at the resulting concentration from a merger. As the attorney general referenced, we recently sued Dean Foods because we think it resulted in too much concentration in milk in Wisconsin, Illinois, and Michigan, and we were joined by the attorneys general in those states in suing to break up that merger to try and get competition back in to get a better price to farmers and lower prices to consumers. [Is it just me or do these seem like maybe contradictory goals? -ed.]

We did JBS last year, same thing. We will continue to carefully and closely scrutinize every single merger that comes before us, look at it on its facts, and make a decision on the facts of the merger. If it doesn’t result in undue concentration and in lessening of competition and provides efficiency and helps farmers and growers get better prices and get more efficiency in what can get to consumers, that will be okay with us, but those that don’t, we will stop. They will not go through during this Department of Justice.

The other thing that we look at, and a lot of you have talked to me about this this morning as I moved around, big companies in the chain, wherever they are, and your views about how much power they have.

Well, as one of my panelists said, look, in the United States — I think it was Senator Grassley said big is not bad. But with big comes an awful lot of responsibility. When you have a tremendous amount of market share, you have the responsibility to behave in ways that keep the competitive playing field open. You cannot engage in acts that are designed to protect or extend your monopoly, so we look very, very closely across all sectors wherever you see an enterprise that has enormous market power.

And you know, America is a great country because we have not only great farmers and great small entrepreneurs, but we’ve grown some of the best companies in the world that are worldwide leaders, and for the most part I believe those companies take their obligations under the antitrust laws very, very seriously. But we take very seriously our obligation to enforce those laws, so we look very carefully.

The final thing I would say is something I think a lot of you in Iowa are familiar with. We have criminal authority in the antitrust division, and it is illegal for competitors to sit down together and fix prices. That’s what you saw — I don’t know if you all out here have seen the movie that just came out called The Informant, and it’s a movie about the lysine cartel, and we will, wherever we find — particularly in the international sphere, wherever we find price fixing like that, we will prosecute that criminally.

So you have my commitment that we’re going to do everything we can to make sure that it’s a competitive agriculture economy, that farmers, growers, packers, processors, are all making a decent wage, and we’re getting American consumers food on their table that’s safe and healthy and a decent price. [This last bit still bothers me immensely.  What part of the antitrust laws or the cases interpreting them give the DOJ the authority to enforce those laws to ensure “decent” wages and “safe” and “healthy” food? -ed.]

* * *

[HOG FARMER] JIM FOSTER . . . Fast forward to today and what did I see? I saw where weeds grew up through the concrete cracks last winter because there was no cattle on feed. I see silos torn down or having been empty for decades. Remains of those portable hog houses are seen stacked rotting in the corner of the field. Very little human activity around what was once a thriving economic model can be seen.

What happened? Perhaps the biggest thing, we were taken back by the Chicago School of Economics where the biggest, toughest boar hog at the trough deserved to be the last one standing, no matter who got rooted out or even killed or economically killed by its tusks. He deserved to win because he would be the most efficient, and that efficiency would be transferred to the consumer. That Chicago school is hogwash.

The recent economic global meltdown is the most vivid costly disaster caused by that thinking. Too big to let fail became the buzz word. Will the biggest of our packers and food retailers finally reach that level? We’re probably close. If so, our food security is at risk.

What is the true real cost of so-called cheap food? I’m glad to read the Illinois Agri-News that a leading proponent of that who’s a civil court judge has turned 180 degrees after he saw the economic meltdown. I’m here today to tell you our price discovery system for finished cattle and hogs is absolutely broken. Not cracked or weakened. It’s broke.