Saturday, July 19, 2003

Antitrust News: Shifting Agendas

On Thursday I mentioned the efforts of Senate Finance Commitee Chairman Chuck Grassley, Iowa Republican, to invoke the Antitrust Division's intervention in stopping a merger in the pork processing industry. Here now is part of the text of Senator Grassley's letter to Antitrust Division chief Hewitt Pate:
I have very strong reservations about this proposed transaction and the continued trend in concentration in the pork industry. I urge the Antitrust Division to carefully scrutinize this proposal, and consider thoroughly the projected impact on independent producers. This is an issue of extreme importance to a vital economic and social mainstay of my state of Iowa and indeed of our nation - the small, independent producer and family farmer. The Antitrust Division must give mergers and acquisitions in agri-business its foremost attention.

I look forward to hearing from you soon about this issue. So you are aware, I plan to speak with Attorney General Ashcroft about my concerns.
Grassley asks Pate to stop the merger because of the potential social impact on Iowa's small farmers. But this is not a stated objective of the antitrust laws. The Sherman Act, for example, is supposed to prevent "restraints of trade" such as price-fixing. Nowhere in any of the antitrust laws does one find a requirement that company's refrain from impacting "independent" producers and family-owned businesses. Indeed, to state such a goal within the law would render such a statute facially unconstitutional.

In practice, of course, the antitrust laws are often used to take from large companies and give to smaller firms. And that's precisely what Grassley seeks here. But this is not an exercise in law enforcement, but in raw political power.

It's also noteworthy that Grassley claims agribusiness should be the Antitrust Division's "foremost" concern. This demonstrates another key flaw of the antitrust laws—they're unfocused. The Antitrust Division is faced with enforcing a law that, read for plain meaning, effectively bans all acts of commerce in the United States. Lacking the resources or political will to do that, antitrust regulators are left to pick-and-choose targets based on a constantly shifting set of wholly political criteria. Generally the policy preferences of a given Antitrust Division chief will dictate the division's priorities. But that certainly doesn't preclude members of Congress (the controllers of the almighty purse-strings) from trying to get their pet peeves moved to the top of the agenda.

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