Peter Carstensen

Comments for the United States Departments of Agriculture and Justice Workshops on Competition Issues in Agriculture

The Department of Justice and the Department of Agriculture have combined to hold a series of workshops related to the competitive issues affecting Americas farmers and ranchers. These comments summarize the competitive issues merit attention in this process. On the farm output side they include the use and abuse of the Federal Milk Marketing Order System as well as other agricultural market orders. These orders are being abused in various ways that harm both producers and consumers. Some of these problems stem directly from the way the USDA has failed to police the ways in which the orders have been written while other problems stem from the failure of antitrust enforcement to control concentration at both the processing and retailing stages of the dairy industry as well as policing the exclusionary practices of dominant cooperatives and milk processors. With respect to livestock and poultry, the competitive problems come primarily from the failure of the USDA to use its authority under the Packers and Stockyards Act to facilitate fair, efficient and open competition in the changing contexts of the poultry and livestock industries, but the DOJ has also failed to limit the increase in concentration on the buying side of these markets which has contributed to the problem of anti-competitive conduct and exploitation. In crop markets, the problems that are emerging relate to the increased concentration of the buying markets, again the result of lax merger enforcement as well as the misuse of market orders in some fruits. Finally, on the input side, there are serious problems for competition resulting from the dominance of important new genetically modified seed technologies by a firm that has used its power to impose unjustified burdens on farmers and is now acting to frustrate technological competition. More generally, farmers are victims of higher input prices resulting from increased concentration in all of the markets providing their inputs.

The Complexity of Conversing About Entrepreneurship, Innovation, and Antitrust

The relationship between law including competition policy and the goal of advancing innovation and entrepreneurship is complex. Bert Foer’s chapter identifies the many ways that competition law and policy directly and indirectly can affect positively or negatively the advancement of that goal. The comment seeks to highlight that range and complexity by using the categories from the traditional I-O Paradigm to show where and how antitrust law and policies it seeks to advance can be used to shape the conditions, structure, and conduct in markets to facilitate outcomes that will advance the public interest in innovation and entrepreneurship.

Controlling Unjustified, Anticompetitive State and Local Regulation: Where is Attorney General “Waldo”?

State and local regulations frequently impose unnecessary anticompetitive restrictions on the market. The challenge is to develop the legal and institutional strategies that can constrain regulation more closely to legitimate public interest goals. This article documents the range of anticompetitive interventions ranging from statutes through agency regulation and local ordinances. The theory of public choice and special interest influence in the legislative and administrative processes explain these observations. Second, the article argues that state attorneys general ought to be in the forefront of challenging such regulations, but the record reveals that often attorneys general defend such regulations. Third, the article identifies statutory, doctrinal, and institutional innovations that could ensure more focused and consistent evaluation of such anticompetitive regulations. Finally, there is acknowledgment that it may be difficult for attorneys general to become the advocates for competition against unnecessary regulation that the public interest requires.

Horizontal Merger Guidelines: The Omitted Dimension of Buyer Power Comments Submitted to the FTC and DOJ

The Antitrust Division of the Department of Justice and the Federal Trade Commission have commenced a process of reviewing the Merger Guidelines that were last subject of a comprehensive revision in 1993. The agencies are holding a series of workshops and have solicited comments on a number of questions that they have formulated. The questions and the workshops, however, fail to take account of a major development in the assessment of mergers: their impact on the buying side of the market. Empirical data show that buying side effects can be quite substantial; yet the Guidelines devote only two sentences to discussing the analysis of this topic. These comments present a review of the central issues that ought to be included in comprehensive merger guidelines concerning buyer power: appropriate definition of the buying side product and geographic dimensions of the relevant markets, the likely competitive effects including the potential for such effects in various levels of market concentration, and the resulting thresholds above which more serious evaluation of mergers creating increased buyer power ought to be investigated. The basic point of these comments is that the revised Merger Guidelines should directly and clearly address the issue of buyer power resulting from mergers and provide appropriate standards for the evaluation of such effects.