I

103D CONGRESS

1ST SESSION H. R. 365

To amend the Small Business Act to assist and protect small businesses

and to protect small businesses against unreasonable use of economic

power by major meatpacking companies, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. SMITH of Iowa introduced the following bill; which was referred jointly

to the Committees on Agriculture and Small Business

A BILL

To amend the Small Business Act to assist and protect

small businesses and to protect small businesses against

unreasonable use of economic power by major

meatpacking companies, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 That this Act may be cited as the ‘‘Small Business Preser4 vation and Protection Act of 1993’’.

5 CONGRESSIONAL FINDING AND DECLARATION OF POLICY

6 SEC. 2. (a) The Congress finds that the existence,

7 in businesses engaged in commerce or in the production,

8 processing, manufacturing, and distribution of livestock
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1 and meat food products for commerce, of marketing condi2 tions detrimental to the maintenance of a free and com3 petitive environment needed for the health, efficiency, and

4 the general well-being of business (1) unduly burdens

5 small businesses; (2) burdens commerce and the free flow

6 of livestock and meat food products in commerce; (3) im7 pairs the participation of small business enterprises in

8 Federal procurement and Government contracts; (4) inter9 feres with the orderly and fair marketing of goods in com10 merce by small businesses; (5) leads to a burdening and

11 obstruction of commerce and the free flow of goods in

12 commerce; and (6) that it is in the national interest to

13 further define the level of activity and course of conduct

14 which is appropriate for the protection of small businesses.

15 (b) It is declared to be the policy of this Act, through

16 the exercise by Congress of its power to assist and protect

17 small businesses, to correct, to prevent, and as rapidly as

18 possible to eliminate the conditions referred to above.

19 DEFINITIONS

20 SEC. 3. As used in this Act—

21 (a) ‘‘Administrator’’ means the Administrator

22 of the Small Business Administration of the United

23 States, or any officer or employee of the Small Busi24 ness Administration to whom authority has been or

25 may be delegated to act in his stead;
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1 (b) ‘‘State’’ means each of the several States of

2 the United States, the District of Columbia, the

3 Commonwealth of Puerto Rico, and the Virgin Is4 lands;

5 (c) ‘‘commerce’’ means trade, traffic, commerce,

6 or transportation, within the jurisdiction of the

7 United States (1) between a place in a State and

8 any place outside of such State, or (2) which affects

9 trade, traffic, commerce, or transportation described

10 in clause (1);

11 (d) ‘‘activity affecting commerce’’ means any

12 activity in commerce, or burdening or obstructing

13 commerce or the free flow of goods in commerce, or

14 having led or tending to lead to a burdening or ob15 struction of commerce or the free flow of commerce,

16 or having led or tending to impair a free and com17 petitive environment needed for the health, effi18 ciency, and general well-being of business;

19 (e) ‘‘person’’ means any individual or any part20 nership, corporation, joint stock company, any orga21 nized group whether or not incorporated, or any

22 other business association existing under or author23 ized by the laws of either the United States, the laws

24 of any State, or the laws of any foreign country;
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1 (f) ‘‘packer’’ means any person engaged in the

2 business (1) of buying livestock in commerce for the

3 purposes of slaughter, or (2) of manufacturing or

4 preparing meats or meat food products for sale, or

5 shipment in commerce, or (3) of marketing meats,

6 meat food products, or livestock products in an un7 manufactured form acting as a wholesale broker,

8 dealer, or distributor in commerce, or (4) of buying,

9 slaughtering, manufacturing, preparing, or process10 ing meats, meat food products, or livestock which in11 volves any activity affecting commerce. For the pur12 poses of this Act, all references to ‘‘packer’’ also in13 clude any person who directly or indirectly owns or

14 controls a packer or any subsidiary, plant, facility,

15 division, affiliate, joint venture, or any other entity

16 under the direct or indirect control of a packer;

17 (g) ‘‘small business meatpacking concern’’

18 means any packer which has less than a 5 per cen19 tum share of the national slaughter for each of the

20 three classifications;

21 (h) ‘‘slaughter’’ means the act of killing an ani22 mal for human consumption;

23 (i) ‘‘process’’ means any reduction of the car24 cass, after slaughter, into smaller cuts (such as

25 primals or fabricated cuts) or cutting the carcass or
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1 primals to subprimals or smaller. For purposes of

2 this Act, ‘‘process’’ shall be synonymous with ‘‘fab3 ricate’’ or ‘‘break’’;

4 (j) ‘‘carcass’’ means the dressed body of a

5 slaughtered animal, excluding viscera, and includes

6 each of the four quarters of the animal;

7 (k) ‘‘meat food products’’ means all products

8 and byproducts of the cattle and hog slaughtering

9 and meatpacking industry, if edible;

10 (l) ‘‘livestock’’ means cattle or hogs, whether

11 live or dead;

12 (m) ‘‘classification’’ refers to each of the follow13 ing: (1) steers and heifers, (2) cows and bulls, or (3)

14 hogs. For the purposes of this Act, there are three

15 separate classifications;

16 (n) ‘‘livestock futures contract’’ means stand17 ardized contracts covering the purchase or sale of

18 cattle, hogs or meat food products for future delivery

19 on or subject to the rules of a contract market des20 ignated pursuant to section 5 of the Commodity Ex21 change Act as amended (7 U.S.C. 7);

22 (o) ‘‘retail’’ means to sell directly to the

23 consumer; and

24 (p) ‘‘future livestock transaction’’ means any

25 livestock futures contract and any contract dealing
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1 with cattle, hogs or meat food products, whether

2 traded on a contract market or not, commonly

3 known to the trade as a margin account, margin

4 contract, leverage account, leverage contract, op5 tion, privilege, indemnity, bid, offer, put, call, ad6 vance guaranty, or decline guaranty.

7 PROHIBITED ACTIVITIES

8 SEC. 4. (a) Each of the following activities is deemed

9 to be unfair and detrimental to small business

10 meatpacking concerns and each such activity is prohibited

11 as follows:

12 (1) No packer which is not a small business

13 meatpacking concern shall own, lease, or operate in

14 any manner any retail meat outlet in the United

15 States.

16 (2) No packer’s total slaughter for any classi17 fication during any calendar year shall exceed 25 per

18 centum of the larger of the last two annual national

19 slaughter totals for that classification as most re20 cently published by the Crop Reporting Board, Eco21 nomics, Statistics, and Cooperatives Service, United

22 States Department of Agriculture. For the purposes

23 of this paragraph, a packer’s purchase, acquisition,

24 or control in any manner of carcasses or any other

25 meat food products from any other person or packer

26 shall be added to that packer’s annual slaughter
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1 total for the appropriate classification and this com2 bined total shall not exceed 25 per centum of the

3 larger of the last two annual national slaughter to4 tals published for that classification.

5 (3) No packer shall engage in any unreasonable

6 use of economic power or discriminate in price be7 tween different purchasers of meat food products in

8 any marketing area of the United States for the

9 purpose of impairing in any manner the marketing

10 ability of one or more small business meatpacking

11 concerns in such marketing area.

12 (4) No packer shall sell below cost or contract

13 to sell below cost any meat food products for the

14 purpose of impairing in any manner the marketing

15 ability of one or more small business meatpacking

16 concerns or for the purpose of eliminating one or

17 more small business meatpacking concerns. Nothing

18 contained herein shall prevent a packer from selling

19 below cost from time to time where such action is

20 in response to changing supply and demand condi21 tions affecting the market for or the marketability of

22 the meat food products concerned, such as but not

23 limited to actual or imminent deterioration of perish24 able goods, distress sales under court process, or

25 sales in good faith in discontinuance of business.
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1 (5) Any officer of a packer which is required to

2 file an annual report by the regulations issued under

3 the Packers and Stockyards Act (7 U.S.C. 181) by

4 the United States Department of Agriculture is pro5 hibited from owning or entering into any future live6 stock transaction.

7 (6) No packer, which is required to file an an8 nual report by the regulations issued under the

9 Packers and Stockyards Act (7 U.S.C. 181) by the

10 United States Department of Agriculture, may en11 gage in any livestock futures contract activity or fu12 ture livestock transaction other than a bona fide

13 hedge transaction as defined by the regulations of

14 the Commodity Futures Trading Commission en15 acted pursuant to the Commodity Exchange Act, as

16 amended (7 U.S.C. 7).

17 (b) Authority to enforce compliance with this section

18 is vested in the Administrator. The Administrator is em19 powered to secure compliance with this section by filing

20 a complaint with the appropriate department or agency

21 of the United States. Such department or agency shall im22 mediately and forthwith investigate the complaint filed by

23 the Administrator and if such department or agency

24 deems that the complaint has merit, shall initiate the ap25 propriate action to enforce compliance with this section,
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1 utilizing all applicable statutes and regulations of such de2 partment or agency.

3 (c) Any person or packer who knowingly violates any

4 provision of this section shall, upon conviction, be pun5 ished by a fine of not more than $500,000 for each such

6 offense committed. Additionally, after such person or

7 packer has received notice from either the Administrator

8 or the department or agency to whom the Administrator

9 has referred the complaint that a violation of this section

10 has occurred or is occurring, each day during which a vio11 lation of this section occurs shall be deemed a separate

12 offense.

13 (d) Any small business meatpacking concern which

14 is injured in his business or property in an amount exceed15 ing $10,000 by reason of any activity forbidden by this

16 section may sue therefor in any district court in the Unit17 ed States in the district in which the defendant resides

18 or is found or has an agent and shall recover threefold

19 the damages sustained by such small business

20 meatpacking concern, together with the cost of the suit,

21 including a reasonable attorney’s fee.

22 MISCELLANEOUS PROVISIONS AND EFFECTIVE DATE

23 SEC. 5. (a) If any provision of this Act or the applica24 tion thereof to any person or circumstances is held invalid,

25 the validity of the remainder of the Act and of the applica-
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1 tion of such provision to other persons and circumstances

2 shall not be affected thereby.

3 (b) Nothing contained in this Act shall be construed

4 to prevent or interfere with the enforcement of the Anti5 trust Acts or the Acts to regulate commerce, nor shall any6 thing contained in this Act be construed to release any

7 person from any obligation, limitation, or requirement of

8 any Act prohibiting restraint of trade or unfair competi9 tion.

10 (c) This Act shall become effective on the first day

11 of January after the date of enactment.

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