Keith Nunes 2019KANSAS CITY — President Joe Biden’s July 9 Executive Order enhancing the enforcement of regulations to prevent anti-competitive business practices comes at an opportune time. The wave of indictments, fines and settlements for price fixing sweeping the meat and poultry industry illustrates the need for such action.

The Executive Order targets both industry consolidation and anti-competitiveness in a variety of businesses including agriculture, health care and technology. Speaking at the White House before signing the order, President Biden said, “The heart of American capitalism is a simple idea — open and fair competition. Competition keeps the economy moving and keeps it growing.”

The Order includes 72 initiatives by more than a dozen federal agencies. Consolidation in the meatpacking industry, where four companies make up 80% of the beef market, was addressed.

The Order calls for the strengthening of the Packers and Stockyards Act. The purpose of the Act is to ensure competition in the livestock, meat and poultry industries. Specifically, the Act prohibits meat packers and processors from engaging in unfair and deceptive practices, manipulating prices, creating monopolies and engaging in other anti-competitive market behavior.

Reaction to the Executive Order has been mixed. The North American Meat Institute (NAMI) framed the order as government intervention in the meat and poultry markets.

“These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose,” said Julie Anna Potts, president and chief executive officer of NAMI. “These proposals have been considered and rejected before, and they are counter to the precedent set in eight federal appellate circuits.”

The American Farm Bureau Federation said the Order addresses several pressing issues facing America’s farmers and ranchers.

“Growing concern about livestock market fairness is accelerated by the continued rise in grocery store meat prices while ranchers struggle to break even on the cattle they raise and poultry farmers being locked into agreements with very little recourse if they’re underpaid,” said Zippy Duvall, president of the Farm Bureau. “It’s time to get to the bottom of what’s driving these imbalances.”

Whether it is coincidence or intentional, the Biden administration’s Executive Order comes at a time when the meat and poultry markets are in the spotlight because of anti-competitive business practices. The list of meat companies paying fines and settling lawsuits for price fixing is long.

To date, 10 people have been indicted, and such companies as Tyson Foods, Inc.; Pilgrim’s Pride Corp.; Smithfield Foods; JBS SA (of which Pilgrim’s Pride is a subsidiary); Claxton Poultry and others have paid more than $500 million in fines. Pilgrim’s Pride was the first company to plead guilty in a Department of Justice criminal investigation, and its former chief executive officer was indicted. He was replaced in September.

Criminal investigations and civil lawsuits into the issue remain ongoing.

Competition and a level playing field are critical to properly functioning markets. Anti-competitive business practices can ripple through the supply chain, unfairly harming suppliers, competitors, buyers and, ultimately, consumers. It is hoped the Biden administration initiative will deter bad actors going forward without unduly interfering in what remains an extraordinarily efficient, successful and innovative marketplace.