That America is now aware that concentration in the beef packing industry has distorted the ranchers’ cattle market and the consumers’ beef market was firmly established by President Trump’s directive to the U.S. Department of Justice to launch an investigation into beef packer price-fixing, price manipulation and illicit collusion.
While we let that settle in, we must ask how we got here. After all, there have been complaints about the monopoly control over the United States’ beef supply chain for decades, with no meaningful government enforcement of our U.S. antitrust laws or the Packers and Stockyards Act (which specifically prohibits anticompetitive conduct in livestock markets) – but with one very important exception.
We must go back about 18 years, to early 2008 when we learned that Brazilian-owned JBS wanted to purchase our nation’s fourth-largest beef packer, National Beef Packing Co., along with Smithfield Beef Group and the then-largest U.S. feedlot, Five Rivers Ranch Cattle Feeding. We immediately requested the U.S. attorney general block the mergers, we asked the U.S. Senate Judiciary committee to launch an investigation, and we filed a private lawsuit to enforce our U.S. antitrust laws.
By early 2009, after the U.S. Department of Justice had filed an antitrust enforcement action, JBS withdrew one of its proposed acquisitions – the purchase of National Beef Packing Co. That was our first antitrust victory, albeit a partial one, and it was the first meaningful antitrust enforcement action filed by the Department of Justice in decades on behalf of our industry.
Although the Justice Department’s action slowed the formation of our monopolized beef supply chain, it didn’t stop it, and our industry continued to shrink while monopoly-structured cattle and beef markets persisted.
So, we formally requested a second investigation. We asked the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration to investigate the beef packers’ cattle procurement practices. That investigation took several years, and a report was issued in 2014 stating that the packers’ use of alternative marketing arrangements (AMAs) has a negative price effect on fed cattle, but no enforcement action was taken.
While we were waiting for this disappointing outcome, in 2013 the South Dakota Law Review published my antitrust article titled “Under Siege: The U.S. Live Cattle Industry,” which helped focus the legal profession’s attention on antitrust concerns in the beef supply chain.
But after cattle prices started their inexplicable collapse in 2015 – even while beef prices were at record levels – we filed our third formal request for an investigation, this time asking the U.S. Senate Judiciary Committee to determine why cattle prices collapsed and why there was intense volatility in the live cattle futures market. This resulted in yet another government investigative report that came out in 2018, but the report stated that investigators did not review internal packer documents. And again, no enforcement action was taken.
Undeterred, in late 2018 we made our fourth request for a government investigation – this one to the U.S. Commodity Futures Trading Commission – in which we asked for an investigation into packer-related or packer-directed trading activities. But there was still no government action beyond the investigation.
By 2019, it was clear the government was disinterested in launching a thorough, probing investigation that would reform the monopolistic structure of the beef supply chain.
And so, in 2019 we filed a national class-action antitrust lawsuit alleging the four largest beef packers unlawfully colluded to suppress cattle prices while inflating beef prices.
After we filed our lawsuit, and after the National Farmers Union joined with us, many other segments of the beef supply chain filed companion lawsuits – including consumers and retailers – which has attracted even more attention to antitrust concerns in the beef-packing industry.
Just months after we filed our antitrust lawsuit, Tyson had a fire in its Holcomb, Kansas, plant that caused market anomalies no one could explain – rising beef prices and falling cattle prices – and the USDA launched an investigation into the beef packers’ possible role. Then during the 2020 COVID pandemic, beef shelves in some grocery stores went empty, and President Trump called upon the Justice Department to investigate the beef packers’ possible role.
Now we see the aftermath of years of neglect – cattle prices were recently falling while consumer beef prices were reaching new highs. And President Trump is intervening by again calling for an investigation, and this time alleging unlawful conduct on the part of the monopolistic beef packers.
This is welcome news for both ranchers and consumers. We hope it results in the elimination of monopoly control over our cattle and beef markets so ranchers and consumers can receive the benefits of a competitive market – not one controlled by monopolies.
