United States: USDA begins work to strengthen enforcement of the Packers and Stockyards Act
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The US Department of Agriculture (“USDA”) announced late last month that it would take steps to help enforce the Packers and Stockyards Act (“P&S”), a 100-year-old law protecting “poultry farmers”. , Pig farmers and ranchers from unfair, fraudulent and anti-competitive practices in the meat markets. “The proposed revisions include additional changes to the illegal conduct provisions of Title II of the P&S Act, as well as a range of grant and loan programs to address issues across the food supply chain .
As part of OMB’s Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions, which outlines upcoming actions by the managing authorities, the USDA announced that its pending actions will focus on three actions:
- Propose a new rule that will provide more clarity to strengthen the enforcement of unfair and fraudulent practices, inappropriate preferences and unfair prejudice;
- Proposal of a new system rule for poultry farmer tournaments; and,
- Rescheduled a rule to clarify that parties do not need to demonstrate interference with competition in order to bring a lawsuit under the Packers and Stockyards Act.
In the press release announcing the plan, Agriculture Minister Tom Vilsack noted how the pandemic has shown how concentration can have a negative impact on independent farmers and ranchers, while exposing consumers to “increased prices and uncertain production.”
While the extent of the impact of these future proposals on the poultry, pig and cattle (“livestock”) industries will not be known until the USDA publishes the promised proposed regulations, we expect a significant setback from the livestock industry as it has proposed in previous ones Revisions. Previous proposals to modernize the provisions of the P&S Act received mixed reactions from industry, Congress, and federal courts. The USDA has abandoned a number of proposed market justice rules promulgated under the Obama administration in the face of opposition. The agency announced the adoption of a definitive rule in December 2020 that will set out criteria against which unfair and inappropriate preferences and benefits can be assessed under the P&S Act. The USDA has not issued a policy statement as to whether an adverse effect on competition must be demonstrated. Several federal appeals courts have ruled in the past that, within the framework of these market conduct provisions, an infringement of competition must be proven as evidence. The proposed revision is intended to clarify that market-wide damage does not have to be proven, which makes it incompatible with the current case study.
We expect the USDA to propose these regulations as a priority over the next several months in light of this month’s White House Executive Order to increase competition in several sectors of the US economy, including the agricultural and livestock sectors. Industry members should look to these proposed rules to take advantage of the opportunity to comment on the proposed rules, determine any impact on their current activities, and ensure that their activities comply with these requirements. This announcement also serves as a reminder to the animal husbandry industry to ensure that their actions in the market are compatible with the principles of the P&S Act.
Co-authored by Temidayo Joseph, a summer associate in the office of Husch Blackwell, LLP, Washington, DC.
The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.
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