Antitrust on the Campaign Trail: Will the Candidates Do What It Takes?
Antitrust law are back on the political agenda, thanks to the 2020 presidential campaign. Elizabeth Warren, Bernie Sanders and other Democratic candidates openly argue for the breakup of tech giants like Facebook and control over tech monopolies.
Less noticeable—but just as alarming—is monopoly control over our food.
A small number of food corporations own most of the food brands consumers purchase. Corporate consolidation in the food and beverage industry is increasing, with 527 new food industry mergers and acquisitions in 2018 alone. Concentration is much worse in the seed industry. The “Big 6” agrochemicals firms that dominated for decades recently consolidated into the “Big 4”: Bayer, Corteva, ChemChina, and BASF. Economists argue that competition in an industry is lost when the top four companies control 40% or more of the market, but these four firms now control 60% of the world’s seed market.
When companies don’t need to compete with each other, farmers face fewer options and higher seed prices. But that’s just the tip of the iceberg. The cross-breeding, genetic engineering, and restrictive patents these firms have drive farmers to adopt large-scale monoculture farming systems. This scale of farming relies on specialized industrial equipment and puts producers on the toxic treadmill of increasing applications of the chemicals sold by the seed companies. That’s a good deal for the monopolies. For the farmers not so much…
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Of course, corporate consolidation doesn’t just impact food choices and seed access. In between the seed and the fork, trading, processing, packaging, transportation and retail are consolidating too. This means farmers are caught buying from monopolies (at high prices) and selling to monopsonies (at low prices). In 2018, food processors saw 152 mergers and acquisitions. These include bakers, confectioners, meat, poultry, pork and dairy processors, fruit and vegetable packer-shippers… and then there’s Amazon, the grocery disruptor, and Walmart, the largest grocery chain in the world.
How do these practices happen? Corporations are able to merge or buy up smaller companies and monopolize these industries due to weak or nonexistent antitrust enforcement by the U.S. Department of Justice (DOJ). Nonetheless, some antitrust legislation does exist, left over from a century ago, when they sprang up at the height of the Industrial Revolution.
The first piece of U.S. antitrust legislation known as the Sherman Act (1890) outlawed contracts and conspiracies that would restrain or monopolize trade. In 1912, antitrust policy became the central economic issue among the four major candidates including William Howard Taft (Republican), Theodore Roosevelt (Progressive), Woodrow Wilson (Democrat), and Eugene Debs (Socialist). Taft argued for enforcement of the existing laws, Roosevelt argued for new, stricter laws with more government oversight over industry, Debs wanted government control of industry operations, and Wilson (who won the election) argued for adding legislation about the rules of engagement. The result was the Clayton Antitrust Act (1914) which expanded on the Sherman Act by allowing federal regulators under the DOJ to review and approve or deny proposed mergers.
Specific to the agriculture industry, the Packers and Stockyards Act (1921) was passed to prevent meatpackers and processors from using unfair practices against the farmers and ranchers who sell to them. Regarding seed policy, the USDA used to administer seed distributions in the U.S. from around 1839 to 1923 when the program was ended after lobbying by the private seed industry. Over the last century, and particularly in recent decades, the agriculture sector has moved further towards monopolization, with little to no resistance from the U.S. Congress. In 1980, the Supreme Court ruled in favor of patents on living organisms, which restricted the ability to save, exchange, or carry out research on genetically engineered seeds. (This was pivotal to the rise of Monsanto, now recently acquired by Bayer.)
However, new policy proposals would reverse this trend. In May 2019, Senators Cory Booker and Jon Tester reintroduced Booker’s bill (The Food and Agribusiness Merger Moratorium and Antitrust Review Act) from 2018 that seeks to halt agriculture mergers immediately. The Act would set up a commission to strengthen antitrust oversight and recommend improvements to enforce antitrust rules. Bernie Sanders also outlines additional policies as part of his Revitalizing Rural America platform including a moratorium on vertical integration, reestablishing the Grain Inspectors, Packers and Stockyards Administration (GIPSA) that oversees antitrust in the packing industry, and better protections for farmers against patent lawsuits from seed corporations.
Just as in the 1912 presidential race, the dangers of corporate power today require the same serious attention and actionable reforms. These efforts must also look beyond the rhetoric and policies to the federal courts and judges that hold the actual power to interpret and enforce any existing or new antitrust laws. To ensure farm justice, policies must continue to expand beyond consumer protections to ensure strong protections for producers, alongside polices of parity and supply management.