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U.S. Antitrust Officials Eyeing Livestock And Grain Markets

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U.S. antitrust experts will examine controls on how livestock markets operate, concentration in the seed industry and transparency in agricultural markets, a senior Justice Department official said August 7.

Deputy Assistant Attorney General Philip Weiser, in remarks prepared for the Organization for Competitive Markets conference in St. Louis, detailed areas that the Justice and Agriculture departments plan to review in a series of public workshops beginning in early 2010.

The workshops will examine the “buyer power” that results when a few processors dominate a market, the impact on farmers from vertical integration of agricultural production and related topics like assuring markets operate openly.

Under the Obama administration, the Justice Department has aggressively stepped up antitrust scrutiny of competition in the telecommunications, pharmaceutical and high-tech industries.

Weiser said an “important area to review” is the 1921 Packers and Stockyards law intended to assure fair prices and competition in livestock sales.

“We are interested in learning whether the controls of the (law) are relevant to the way businesses are run today and whether the law is being implemented effectively to promote competition,” he said.

Earlier this year, Brazil’s JBS abandoned a plan to acquire U.S. meat company National Beef Packing Co. after U.S. antitrust authorities sued to halt the deal. The Justice Department argued it would create the largest U.S. beef packer, slaughtering about 35 per cent of U.S. cattle, and reduce the price that slaughterhouses pay cattle ranchers.

The Justice Department’s antitrust already “is keeping a close watch” on livestock markets, he said.

Another area to be examined is concentration in the corn and soybean seed industry, the dairy market and the livestock market, and whether new companies are able to enterthosemarketseasily. MonsantoCo andDuPontCo are among the biggest U.S. seed makers.

“Competition is frequently local or regional in nature, meaning that the nature and extent of competition-related concerns will differ across different parts of the country and that broad national statistics can be misleading,” Weiser said.

Transparency in the overall agricultural market is also of interest to antitrust experts.

“Some have suggested that trading in agriculture markets has shifted from organized exchanges to a greater reliance on vertical integration and bilateral trading,” he said. “To the extent that these changes in trading raise any competition concerns, however, we will welcome suggestions and strategies for promoting greater levels of transparency.”

A U.S. Senate panel last month issued a report blaming commodity index funds for driving up wheat futures prices so high last year that it became impossible for grain firms to use Chicago Board of Trade contracts to hedge their purchases.

During his election campaign, President Barack Obama said his administration would strengthen fair-play laws by steps like a regulatory definition of unfair pricing. He said family farmers should have fair access to markets and supported a ban on meatpackers raising cattle in competition with farmers.



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