Antitrust Law Daily Justice Department will not challenge pork producer collaborative efforts
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Monday, May 18, 2020

Justice Department will not challenge pork producer collaborative efforts

By Peter Reap, J.D., LL.M.

In response to an expedited business review request by the National Pork Producers Council as it faces market disruption caused by the COVID-19 pandemic, the Justice Department will permit collaborative efforts for the orderly euthanization of hogs.

The Department of Justice will not challenge the proposed collaborative efforts of the National Pork Producers Council (NPPC) to work with the U.S. Department of Agriculture (USDA) to address certain hardships facing hog farmers as a result of the COVID-19 pandemic, it announced in a letter to the NPPC, the nation’s leading association of hog farmers. The NPPC submitted its business review request pursuant to the expedited, temporary review procedure detailed in the Joint Antitrust Statement Regarding COVID-19 (joint statement) issued on March 24 by both the Justice Department and the FTC.

The business review request stated the NPPC’s wish to "confirm that its efforts to keep pork products available for America’s tables and to facilitate the orderly euthanization of hogs for which there is no market do not violate the antitrust laws." Because the COVID-19 pandemic has resulted in severe capacity restrictions at pork packing plants, the NPPC, USDA, and industry analysts have predicted that the need to euthanize a large number (approximately 700,000 per week) of hogs will be unavoidable. The NPPC believes a coordinated approach by private industry and government to the euthanization and disposal of these hogs is necessary to comply with the many legal and ethical constraints.

Specifically, the NPPC seeks to collaborate to: (1) assist government authorities to ethically and efficiently depopulate unmarketable hogs; (2) implement an orderly euthanization and disposal process; (3) assist government representatives in communicating with farmers who may need assistance in this effort; and (4) help government representatives develop policies and initiatives to address the challenges involved in this effort. The NPPC commits to follow several safeguards to assure antitrust compliance, including: (1) Decisions to euthanize hogs will be made unilaterally by individual farmers; (2) the NPPC will not facilitate any coordination or discussion of prices between NPPC members; (3) the NPPC and hog farmers will not use any collaboration to engage in COVID-19 profiteering; and (4) the proposed conduct will be limited in time to the duration of the crisis.

The Justice Department’s letter in reply explains that the processing plant closures addressed in President Donald J. Trump’s April 28, 2020, Executive Order have had impacts up and down the supply chain. One of those impacts, according to NPPC, is the tragic need to euthanize unmarketable hogs that could not be brought to market due to processing capacity challenges. The letter determines that the NPPC and its members may work at the direction of the USDA and state agriculture agencies to achieve humane and efficient euthanization of hogs that have grown too large to be processed and are thus unmarketable. The NPPC may also share general information with its members about best practices for depopulating unmarketable hogs.

The FTC stated that, as represented by the NPPC, most of the conduct at issue "will occur at the direction and under the supervision and coordination of the USDA—a government agency—and therefore should not raise concerns under the antitrust laws. Moreover, NPPC’s communication of non-competitively sensitive information to its members, e.g., best practices for depopulating unmarketable hogs, even if not occurring at the direction of and under the supervision and coordination of the USDA, similarly is unlikely to raise concerns." The Justice Department reserved the right to challenge the conduct in the future if it is later revealed to be anticompetitive in purpose or effect. The response also indicated that "the Department would have serious concerns if industry participants, such as meat processors, engaged in coordination that facilitated price fixing, output restrictions, market allocation, anticompetitive exchanges of information, or other anticompetitive conduct."

Makan Delrahim, Assistant Attorney General of the Department of Justice Antitrust Division, said: "Today’s letter addresses some of the challenges created for farmers when packing capacity shuts down. Meanwhile, we remain committed to vigorous enforcement of the antitrust laws to ensure that farmers and consumers see the benefits of competition."

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