FTC Focuses on Mergers and Acquisitions in Agriculture and Food Industry | Holland & Knight LLP

Federal antitrust enforcement in agriculture was little more than a whisper for decades. The Obama administration announced that it was making farm antitrust enforcement a priority and then held workshops on the subject. During the Trump administration, there have been some throat-clearing events, including notable antitrust enforcement activity in the livestock and poultry industries. But there is no doubt that the federal government has rediscovered its voice under the Biden administration, as evidenced by the Executive Order on Promoting Competition in the U.S. Economy of July 9, 2021, proclaiming the administration’s policy of to “apply antitrust laws to combat excessive industry concentration, abuses of market power and the harmful effects of monopoly and monopsony – especially as these issues arise in [among other industries] agricultural markets. »

In response to this general directive, the Federal Trade Commission (FTC) and the Antitrust Division of the United States Department of Justice (DOJ) have launched a series of programs, “Listening Forum on Firsthand Effect of Mergers and Acquisitions”, aimed at obtaining the feedback from stakeholders who have experienced the direct effects of mergers and acquisitions in the industries targeted by the July 2021 Executive Order. Each of the listening forums will cover concerns from a specific industry. The stated purpose of these listening forums is to supplement the FTC and DOJ’s request for comment on merger enforcement guidelines.

Listening Forums

The first listening forum was held on March 28, 2022 and focused on the food industry. FTC Chair Lina M. Khan led the discussion, which drew anecdotal comments from farmers, independent grocers and others in the food and agricultural markets. Kahn was joined by DOJ Antitrust Division Assistant Attorney General Jonathan Kanter. The focus of the discussion came as no surprise: Participating constituents – mostly small producers and retailers – painted a picture of market pressure in sourcing products and materials, processing the products they produce, the supply of their products to institutional markets, scalability and competition against significantly larger market players. Complaints about mislabeling and misleading advertising also surfaced from some of the participants. Each of the participants attributed these challenges to an allegedly anti-competitive marketplace driven in large part by a lack of enforcement.

While Kahn made no predictions about future enforcement actions by the FTC, she reiterated participants’ comments, including “how the consolidation of a single market may impact direct participants in this market, but can also have ramifications cascading down the supply chain and across even seemingly unrelated markets,” she pointed out as something the FTC will keep in mind going forward. Kanter echoed Kahn’s sentiments describing participants’ concerns as “the vicious circle of consolidation.” While the overall commentary was neither earth-shattering in its novelty nor a clear harbinger of things to come, agency dialogues like these are often the precursor not only to increased enforcement actions – which are almost expected from this administration – but also from an increase in private litigation.

Conclusion and takeaways

The main takeaway from the first listening forum for food and agriculture industry organizations, and indeed any industry targeted by the July 2021 executive order, is that the Biden administration intends to follow through. to his urgent call for a relaunch of the application of antitrust laws. . If organizations with potential antitrust risk weren’t listening in July 2021, they should be listening now.

Attentive listening alone will not necessarily prevail. Organizations must be proactive to protect themselves in this heightened surveillance environment, starting with a multi-faceted antitrust risk assessment. This self-assessment should begin by assessing existing contractual relationships for antitrust risk, paying particular attention to supply and distribution agreements that may prevent competition and joint venture agreements that may unnecessarily restrict competition between participants (particularly with respect to hiring practices, special attention of important antitrust caution in the current environment). Organizations should also reassess the practices of the professional associations in which they are involved to ensure that all best practices are followed. They should also enter into discussions on any potential merger or acquisition with their eyes open to the likelihood of scrutiny, even if the transaction involves vertically aligned businesses and not direct competitors.

About Nicole Harmon

Check Also

Logiq (OTCMKTS:WEYL) vs. Etsy (NASDAQ:ETSY) Financial Analysis

Logiq (OTCMKTS:WEYL – Get Rating) and Etsy (NASDAQ:ETSY – Get Rating) are both retail/wholesale companies, …