Transcripts For CSPAN2 Federal 20240703 : vimarsana.com

CSPAN2 Federal July 3, 2024

Everyone worries about food prices and who bears the brunt. Theres a lot of evidence that concentration and Food Supply Chains contribute. As a result the federal trade commission have brought cases ranging from investigations into pesticide manufacturers, Food Distribution processing restaurants as well as Grocery Store retailers. Today the panel will focus on potentially anticompetitive conduct and mergers up and down. The Senior Advisor for the fair and competitive market agriculture and the Deputy Assistant the department of justice and the chair of the commission in india and chief of the antitrust division for the attorney general. To get ourselves started, i want to start with this toplevel question. The covid19 pandemic taught us some hard lessons about the importance of resilience in the supply chains and so i would like to start with a broad question of now post pandemic what are your jurisdictions focused on. In the last six months to a year we filed suit against a company that facilitates Information Exchange among the processors and bringing the intersection. There is a wonderful slide that promotes product where youve got people pulling the rope together and that pretty well encapsulates. Manufacturers alleging the Loyalty Programs end of the associated rebates are anticompetitive and exclude generic pesticide manufacturers with the additional states weve also been investigating the pricing that resolved in the pandemic and weve got a couple of investigations going on into the various agricultural inputs. Good morning, everybody. A huge thanks to the doj for putting this important event together. Its a pleasure to be here for the third time. So, not surprisingly the Food Industry or Food Supply Chain has been a key area of focus for some time and certainly 24, 25 in the annual plan we have said we are going to prioritize investigations in this particular area including retail, grocery and the food supply sector generally. Food inflation in canada throughout the pandemic was an issue that truly galvanized canadians to call for more competition in our economy we saw grocery prices increasing at the fastest rate in a 40 years outpacing inflation in the country. So let me talk about a couple of things that we have done or are doing. Last year we engaged in and published in june Retail Grocery market studies. That was timely given the concerns of the food prices and we came out quite strongly that canada was in desperate need of more competition in the sector. For a variety of reasons including high levels of concentration that had been increasing in the whole Food Supply Chain. We had been looking over the last five years very carefully at the mergers and the Food Supply Chain and in fact we have one right now between two companies that are sort of on the table. We are also working with international partners, people here today and the supply chain group and in investigation going on. Last summer we got a criminal guilty plea in that area from one of canadas big bread manufacturers, bakers 50 million fine for pricefixing over an extensive period of time and i suppose the last thing, and i know im probably burning up too much time and it ties to the last panel, which was excellent is we have tremendous public restraints on competition and the food sector in canada in addition to throughout our economy, and we are advocating and focusing our efforts tremendously on the advocacy side to tackle the regulatory barriers. We have trade barriers and a supply management Agricultural Supply management system. So the bureau is kind of all over the map trying to tackle these issues. The shock of the pandemic, thank you, commissioner, for having me. The shock of the pandemic really brought home for everyone across the food and Agricultural Supply chain just how problematic the bottleneck concentration and lack of competition has become and how that harms everyone across the industry from the farmer whose place of cattle has collapsed to the worker who cant get beef on the shelves to the working family that cant get beef on the shelves to everybody in between. So, we have been taking like the secretary mentioned on the last panel a whole of government approach to this and there are i will put them into three big buckets. Number one, we have been taking our supply chain resiliency tools Congress Granted and investing a billion dollars in the Processing Capacity to increase the choice that farmers and ranchers have at the local level and more channels to the consumers in the Grocery Store. Weve been investing 900 million in the domestic sustainable fertilizer capacity and more to support the transition from the concentrated system that is extremely efficient and a shortterm way but not resilient to the shock and not efficient over a longterm way. So Major Investments weve been making on behalf of the american people. A second major area has been the revitalization of our antitrust fair market regulatory enforcement toolkit and real appreciation and credit to the partners and department of justice sitting with me as well as our partners and of the attorneys genital helping us do this where we have some old tools in fact the secretary mentioned them. They give the authority to help protect farmers, ranchers, workers all across that livestock supply chain and we are modernizing shining a spotlight on contracting practices to empower prohibiting retaliation and weve got a number of other rules coming to enhance the ability to tackle unfair practices across the sector. The third area usda and this is a huge credit to the council and executive order, we do a lot and if we have to think about how to align our program to that Competition Mission this includes for example weve stood up a liaison to help make sure that we can be the farmers voice within usda and across federal government at the Patent Office and other places to make sure the seed structure is working in ways that support competition and fairness to farmers and weve been doing more to align the consumer labeling so the product in many ways inspired by ftc aligns with what the consumer thinks when they walk into a store. So a lot of we are doing and a lot more to be done because although inflation has come down dramatically, 2 year on year and 11 high in 2022, weve got to learn the lesson that the bottleneck is something we cannot let sustain. Thank you and its always a pleasure to come back. My colleagues wont like this but it was home for two decades of my career. I would say what we have learned from the pandemic is what any farmer or rancher or anyone else in the Agricultural Industry would have been saying for 20 years which is we made a bit in the 80s and we lost. What, i mean, by that, there was this idea that the key was if we were the most efficient Agricultural Producers in the world, experts would explode and everyone would be better off. You look back i think our farmers are the best in the world and our ranchers are the best in the world. Numbers are incredibly successful in experts. But somehow none of that seems to have benefited the people who actually do the work, the ranchers, the factory workers, the farmers. And thats really important because when problems occur in agriculture, they have followon effects unlike any other industry. I grew up in wisconsin. There was a period in the late teens where wisconsin, world best Dairy Farmers was losing to dairy farms a day. When i go home to wisconsin and we go up to northwest or northeast wisconsin where the dairy industry is, it doesnt look anything like it use to. It looks like a postapocalyptic series on netflix. When we get things wrong and i want to be clear im not saying, antitrust law is about Economic Growth directly but when we get things wrong in agriculture, it has a followon effect. But its hard to answer the second part of the question because when i look at what we have been doing, everything. We have criminal pricefixing cases in the poultry industry, we have information sharing cases affecting both workers in the plant and the selling of the ultimate product in the marketplace. We have concerns with right to repair, abuse of intellectual property, exclusionary conduct. Weve done all of that in the last two years or i guess three and a half years. And so its kind of everything. Looking at the scenario a significant share of the expenditure is on food and 45 of the people in the country are dependent. So when this pandemic began and we had to lock down, that was a very big hit for the majority of the population in the country and thats when the government started thinking in terms of expanding the safety net so we had a very big program launched by the government to be able to provide food to everybody, and that covered a bit 800 million in the country provided free food items which was essential. That Program Brought forward to aspects. One is food subsidies, something that was being looked at, that also came to an end. We needed to have adequate stock and whatever we needed to provide to the farmers for them to be able to produce, we were going to continue to support them. That is one major aspect. A second, there was a big push in the infrastructure and in terms of food Harvest Technology how can we ensure the crops and food grains that we lose because of improper storage or transport, how can we eliminate that . That has been the focus in this area and we still continue to have the same russians, so that program has not come to an end. Food prices are going up so the focus is now on these aspects how we build up infrastructure and ensure that we dont have any post harvest losses. Let me start by saying the comments i make are my own and are not necessarily reflecting the opinions. With regards to what our office is kind of doing, i think i can put it into buckets, like whats going on in and tag and then whats going on more consumer facing. So in agriculture, doing i guess investigations where its bringing cases that address issues or monopolies, so to the extent that producers need markets that are not impacted by anticompetitive activities, we will be investigating those. Whether it be chicken farmers or soybean farmers or what have you, we will be looking at those markets and also markets for input, so providing investigative issues were efforts where say for instance you have seeds or fertilizer or pesticide markets that may be impacted so we will be looking at those markets as well and making sure that if Enforcement Actions need to be taken that we are involved. Also, the federal trade commission in eight states plus the sisters of columbia have filed action to join the number two and number one. So those are pocketbook issues and one of the things that i think we all know because well eat and so grocery issues are top of line and something that my attorney general has been very vocal about into something that he has encouraged my office to be involved in. Those are two issues that we have kind of focused on or are focusing on post pandemic, and agriculture is a key market in maryland i think of somewhere around 3 billion in 2022 in terms of cash. Its about 1 its a very important market for us. To make sure the markets are working efficiently without harm. We will have to look back a little bit and if a couple of you might share if theres a particular case or investigation that have been emblematic of your jurisdictions approaching to the Food Supply Chain, i would like to start with you, chair. This is the investigations youve done recently. One of the interesting cases we looked at to the committee, that is an important aspect. Many look at protein, there is a focus on that in the Distribution System you get rice, beets, sugar, basic commodities. That became a cause of concern enabling people. This matter was investigated and we did have a finding that said they are in some ways because they are giving out information with regards and its enabling the producers to charge so they were required from that activity to also have a Competition Compliance Program where they would encourage people to adopt not just anticompetitive so that is one recent action that happened. We are doing a lot on rulemaking, so im going to say im going to give a rulemaking example though i think for some of the cases im also extremely proud of weve done a number of landmark cases. The two rulemaking as we finalized are important for our sector. The first one is provides transparency and when you think about this sector, multiple people probably dont know this, its very big in maryland, but they are not about and sold on the market. The last one in 1968 were 69 the Chicken Company owns the chicken all the way from genetics to the Grocery Store shelves and the only place where it doesnt is the stage that the farmer, the poultry grower that takes on the loans and owns the farm and the land and theyve generally been paid for on a Payment System that would reword the performance relative to the how they do versus their peers and how efficient they are turning the seed into chicken poundage. The system has the vertical integration on that particular system has been rights for abuses over a number of years and we put in place one that shines a spotlight in some ways on the franchise rule to give those farmers a much better visibility into what are the real range they are taking on and one of the differences in the input they are doing both to empower them and also shine a spotlight on the market that we think has a real prophylactic affect as well and also a final rule to prohibit discrimination on the basis of who the farmer is as well as cooperatives retaliation for reporting to the government for exercising contract rights, for seeking to negotiate with an officer. These two rules are important and we have more in the pipeline to deliver meaningful on the ground change that our farmers and ranchers need. I like sitting next to andy so i might just give my three minutes back to him. I do want to take a little trip through history because i think its important to understand whats going on now. This isnt the first time weve faced a serious questions of power and agricultural markets and market power. Way back at the end of the 19th century, the u. S. Government tried to enforce against the major meat processors. At the time the five largest accounted for 80 of all meat processed in the United States. By the way today it is for that account for the 85 and one of the things they were struggling with is the courts seemed very skeptical to the issue and i know thats some of us have any experience with so what happened . Its one of the reasons why the government created the federal trade commission. The first report the federal trade commission did, massive three volume juggernaut was on meatpacking the same day they filed that report, the department of justice filed a critical dissent degree that had the impact of helping to de concentrated the industry but congress wasnt even done then. In 1921, not the most progressive liberal congress to sit in the United States congress. Nevertheless they passed the law and if you look at the act, somebody looked down and thought about every bad decision and tried to write around it. The resulting relationship of all the forces and cooperation across the government was incredibly successful. By the 1970s they controlled 20 or 30 of the market. So we know what the solution is and it requires a whole of government approach. Thinking through with the cases brought we will quickly summarize them but i want to stress two things. Think about who we are working with and what part of the food chain we are addressing. One of the major issues they face is right to repair. Its a very concentrated industry and the manufacturers make it much harder to fix their equipment so for a farmer, its exactly what they have always done. They brought a private suit to challenge the policy. The department of justice weighed in at the amicus brief and the seventh circuit agreed and reversed the dismissal. In my entire life of speaking i never got an applause line like i got for saying the department of justice filed a brief agreeing with farmers on the right to repair. When im speaking at the National Farmers union we had cases alleging that workers and poultry processing plants had reduced wages because of information sharing Exchange Going on for 20 years. We also had the case dealing with the state of minnesota. That information some of my colleagues talked about we brought not one but two cases. The second involved these chicken growers who were in a very weak bargaining position and faced the processor who said on top of every other way we control the market, we will actually penalize you if you take a competitive offer and leave. Finally, that was critical and finally last week or the week before, they not only announced they were banding their merger but they also nicely blamed the department of justice and we will take that blame any day of the week. I would love to turn next to labor and start with you. This is an area of key interest. We are focused on how the corporate consolidation is affecting wages and the impact on workers ability. I would love to give an opportunity to highlight how the cases and investigations are looking. I dont have a whole lot i can say publicly but we addressed it in the agricultural markets and weve been taking a look at some of these issues. I do want to give credit to the Washington State attorney general for the offices attention in an entirely different end of the Food Supply Chain multiple agreements and fast food franc

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