"This deal will leave the independent producer with even fewer choices of who to buy from and who to sell to. It could hurt the ability of farmers to get a fair price for their products. And a combined Tyson-IBP presence could leave consumers with fewer choices and higher prices in the grocery store," Grassley said. "The developments of the last week underscore the need for Congress to focus on how to improve the way agriculture mergers are reviewed and approved, so the concerns of family farmers are fully taken into account."
Grassley's legislation ? the Agriculture Competition Enhancement Act ? would change the merger review process of the Justice Department as it pertains to agribusiness and enhance the Agriculture Department's ability to address anti-competitive activity in the industry.
Grassley first introduced this measure last year. It was not acted on during the last Congress. Grassley said he's putting it back on the table to jump-start a debate on how to respond to one of the most important issues in agriculture today: concentration.
"I hope lawmakers can work constructively and achieve a bipartisan consensus on legislation this year. I'm committed to making sure family farmers have fair access to the marketplace. A level playing field is the best way to keep our economy strong, the agricultural community vibrant and competitive, and consumers satisfied," he said.
Grassley has led a number of initiatives dealing with increased concentration in agriculture. He is the co-author of legislation to restrict packer ownership of livestock. Last year, the President signed a Grassley-sponsored bill to require the Agriculture Department to dramatically improve its enforcement of the Packers and Stockyards Act. Grassley has also petitioned federal regulators to more carefully review agribusiness mergers to ensure competition.
Details of the comprehensive reform bill Grassley introduced today are described in the Senate floor statement he delivered today. It follows this page.
Mr. President, as most of my colleagues know, agriculture is a crucial industry for Iowa. The small, independent family farmer is an important thread which holds together my state's cultural, economic and social fabric. In fact, the family farmer is one of the best things about Iowa's heritage. My colleagues are well aware that I'm committed to preserving and supporting this valuable member of Iowa's communities.
Agriculture is a risky business. I know that from personal experience - I've lived and worked on a farm all my life. But these days, farmers feel especially vulnerable. "Merger-mania" has been running rampant, with large companies joining forces to create new business giants in every sector of the economy, including agriculture.
The agriculture sector has witnessed a number of mega-mergers and alliances affecting grain and livestock. And the independent producer is seeing fewer choices of who to buy from and who to sell to. More and more family farmers and independent producers are feeling the pressure and impact of concentration in agriculture. Good men and women who have farmed for years and years are going out of business. Yet, the independent farmer is one of the most efficient businessman in our nation's economy. That's why the United States can feed itself and a good portion of the world.
I've said before that I am not of the belief that all mergers are in and of themselves wrong or unfair to family farmers. But we need to make sure that open and fair access to the marketplace is preserved for everyone. We need to make sure that large businesses are not acting in a predatory or anti-competitive manner. We need to make sure that family farmers and independent producers can compete on a level playing field. That 's how we can keep our economy strong, our agricultural community vibrant and competitive, and our consumers happy.
Now we've heard that a Delaware Court has ordered Tyson Foods and IBP to resume their merger discussions, because Tyson Foods did not have a contractually permissible reason to terminate its merger agreement with IBP when it announced in March that it was rescinding the transaction. While I do not want to take issue with the court's findings, I am concerned about the fact that this merger looks like it will go through and, consequently, the meat industry will consolidate even further. Beginning last September when Donaldson, Lufkin & Jenrette/Rawhide Holdings Corporation, then Smithfield Foods, and finally Tyson Foods started a bidding war for IBP, I pushed the Justice Department to carefully scrutinize each possible business combination. In January, I wrote the Justice Department urging it to vigorously review the Tyson-IBP transaction from all angles, and to consult with the Agriculture Department to better ascertain the ramifications of such a merger on family farmers and independent producers. I would have thought that a combination of the nation's largest poultry producer with the world's largest producer of beef and pork products would result in significantly reduced market opportunities, as well as increased the possibility of anti-competitive business practices. I shared the concerns of many farmers and producers that this transaction would adversely impact their ability to obtain fair prices for their products. I was also concerned that a combined IBP-Tyson presence in the retail market would negatively affect product choice and the prices consumers pay at the meat counter.
But the Justice Department determined earlier this year that the potential negative impact on competition was insufficient to sustain an injunction against the merger under the antitrust laws. Because the Justice Department completed its antitrust review in January, I understand that there is nothing further for the Department to do in terms of an antitrust review if the parties re-engage their merger talks in due course and without changes to the transaction. But I remain seriously concerned about the impact this merger will have on our farm community and I hope that, if this merger is ultimately completed, the Justice Department will carefully monitor whether a merged IBP-Tyson will have unintended consequences on competition in the meat economy and, if it does, take appropriate action.
Nevertheless, this development re-energizes my gut feeling that we need to somehow change the way ag mergers are reviewed and approved. So, today I'm re-introducing a bill I authored last year, the Agriculture Competition Enhancement Act, to help address some of the competition concerns of America's family farmers and independent producers. My bill will refocus the merger review process as it pertains to agri-business, and will enhance the Department of Agriculture's ability to address anti-competitive activity in agriculture. I believe that bringing to the table a greater understanding of ag producers' needs when ag mergers are reviewed is the biggest missing element to making the merger review process as fair as possible. Closing this gap is the heart of my proposal.
Several provisions in the Agriculture Competition Enhancement Act are based on proposals by the American Farm Bureau, the largest organization representing producers of agricultural commodities. However, I'd like to briefly discuss what I believe to be the most important components of this bill: the enhancement of the Department of Agriculture's role in the Hart-Scott-Rodino review process, the creation of a new "impact on family farmers and independent producers" standard of review by the Department of Agriculture for ag mergers, and the expansion of the Department of Agriculture's ability to take regulatory and enforcement action with respect to anti-competitive and unfair practices in the agricultural sector.
Far more than the Justice Department or the Federal Trade Commission, the Department of Agriculture has extraordinary knowledge and expertise in agricultural matters. The Department of Agriculture formulates ag policy for the nation, and works closely with the farm community about their various concerns. So, I believe that the Department of Agriculture is the office that can best assess the true impact of ag mergers and other business transactions on farmers, ranchers and independent producers. That is why my bill seeks to expand and enhance the role that the Department of Agriculture plays in the antitrust review of ag mergers.
Currently, when the Justice Department or the Federal Trade Commission assesses a proposed merger, the focus of their analysis is weighted heavily toward the impact of the transaction on consumers. However, agriculture is unique. The antitrust laws already recognize this with the ag cooperative exception. But I believe we need to go further by requiring the Justice Department and Federal Trade Commission to specifically take into account the effect ag mergers have on family farmers and producers. The Agriculture Competition Enhancement Act would do just that by requiring the Department of Agriculture to conduct an assessment of how a proposed ag transaction will affect family farmers and independent producers and their access to the market.
I realize that presently the Justice Department and Federal Trade Commission informally consult with the Department of Agriculture when they consider ag mergers. But I believe that the current process does not sufficiently ensure that the farm community's concerns are being adequately addressed. The approach I advocate will ensure that producers' concerns and needs are fully discussed when federal agencies examine proposed ag business mergers. By guaranteeing inclusion and openness for family farmers and independent producers, we can go a long way toward alleviating their understandable anxiety about an increasingly concentrated industry.
So my bill requires the Department of Agriculture to do a merger review that focuses on the needs of producers by examining whether the transaction would cause substantial harm to farmers' ability to compete in the marketplace. This review would be conducted simultaneously with the Justice Department's antitrust review, in order to minimize disruption to the current merger review process. Further, my bill encourages the parties and the Department of Agriculture to resolve concerns about the proposed merger during this time frame. If its concerns are not satisfied, the Department of Agriculture has the ability to challenge the merger in federal court to either stop the merger, or to impose appropriate conditions or limitations on the proposed transaction.
Recognizing that the Department of Agriculture needs to have an individual who will perform this new antitrust responsibility, my bill calls for the creation of a Special Counsel for Competition Matters at the Department of Agriculture. My bill also provides for increased funding for competition matters, and authorizes additional specialized staff ? including antitrust attorneys and economists ? at the Justice Department and Department of Agriculture, to ensure that these agencies have the appropriate resources to accomplish the goals of this legislation.
Furthermore, under my bill, the competition protection authorities of the Department of Agriculture's Packers and Stockyards Division are extended to include anti-competitive practices by dealers, processors and commission merchants of all ag commodities. This expanded authority, based on provisions in the current Packers and Stockyards Act, will give the Department of Agriculture an increased ability to look at unfair, deceptive and predatory business practices by all ag businesses, not just packers and poultry farmers.
As my colleagues from rural states know, ag concentration is one of the most important issues in agriculture today. Other members here in Congress have introduced bills or are presently working to craft their own legislative proposals to respond to the concerns of America's farmers. I want it to be clearly understood that it is my desire to work with my colleagues on both sides of the aisle, as well as the Bush Administration, so that we can make meaningful progress on this issue. I know that my proposal has its critics, but I am willing and ready to listen to their concerns and work on constructive changes to my bill. But I truly hope that we can achieve a bipartisan compromise sooner rather than later on this issue, so we can calm farmers' fears about high levels of ag concentration.
I ask unanimous consent that the text of the bill be printed in The Congressional Record.