II

106TH CONGRESS

2D SESSION S. 2744

To ensure fair play for family farms.

IN THE SENATE OF THE UNITED STATES

JUNE 15, 2000

Mr. ASHCROFT introduced the following bill; which was read twice and

referred to the Committee on the Judiciary

A BILL

To ensure fair play for family farms.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fair Play for Family

5 Farms Act of 2000’’.

6 SEC. 2. DEFINITION.

7 In this Act, the term ‘‘Secretary’’ means the Sec8 retary of Agriculture.

9 SEC. 3. PRODUCER IMPACT ANALYSIS.

10 (a) INTERAGENCY COOPERATION.—The Secretary

11 shall—
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1 (1) monitor competitive conditions in the agri2 cultural economy;

3 (2) through designated personnel confer regu4 larly with designated personnel in the Department of

5 Justice and the Federal Trade Commission to dis6 cuss and review law enforcement and regulatory

7 matters related to competitive conditions in the agri8 cultural marketplace; and

9 (3) share legal, economic, and technical infor10 mation with the Department of Justice and the Fed11 eral Trade Commission, consistent with applicable

12 confidentiality restrictions, in order to facilitate each

13 agency’s enforcement responsibilities and duties

14 under this Act.

15 (b) REVIEW OF CERTAIN MERGERS OR ACQUISI16 TIONS.—

17 (1) APPLICATION.—This subsection applies to a

18 merger or acquisition—

19 (A) with a value of more than

20 $50,000,000; and

21 (B) involving a person in the business of

22 manufacturing an organic agricultural input for

23 sale to farmers or in the business of purchasing

24 livestock, poultry, or a basic agricultural com25 modity for wholesale resale either unprocessed
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1 or processed, who files a notification under sec2 tion 7A of the Clayton Act (15 U.S.C. 18a).

3 (2) NOTICE.—The Department of Justice and

4 the Federal Trade Commission shall notify the Sec5 retary of all filings described in paragraph (1).

6 (3) PUBLIC COMMENT.—The Secretary shall—

7 (A) publish promptly in the Federal Reg8 ister a copy of each notice received under para9 graph (2);

10 (B) accept public comments on the pro11 posed merger described in such notice; and

12 (C) consider as part of the review required

13 by paragraph (4), such comments timely re14 ceived.

15 (4) REVIEW.—Not later than the expiration of

16 the review period provided in section 7A of the Clay17 ton Act (15 U.S.C. 18a), the Secretary shall—

18 (A) review the proposed merger or acquisi19 tion described in the notice;

20 (B) determine—

21 (i) the probable effects such merger or

22 acquisition would have on the prices paid

23 to producers of any livestock, poultry, or

24 basic agricultural commodities who sell to,

25 buy from, or bargain with 1 or more of the
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1 persons involved in the proposed merger or

2 acquisition;

3 (ii) impacts on producers on a re4 gional basis;

5 (iii) past anticompetitive conduct of

6 the companies under review; and

7 (iv) whether such merger or acquisi8 tion would—

9 (I) result in significantly in10 creased market power for any of such

11 persons; and

12 (II) increase the potential for

13 anticompetitive or predatory pricing

14 conduct by any of such persons;

15 (C) prepare a report—

16 (i) containing—

17 (II) the detailed findings made

18 by the Secretary as a result of such

19 review and such determinations; and

20 (II) an economic analysis of the

21 Secretary regarding whether such

22 merger or acquisition may substan23 tially lessen competition or tend to

24 create a monopoly; and
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1 (ii) not including proprietary informa2 tion; and

3 (D) transmit to the relevant Federal agen4 cies and Congress and shall publish in the Fed5 eral Register, simultaneously, a copy of such re6 port.

7 SEC. 4. ASSISTANT ATTORNEY GENERAL FOR AGRICUL8 TURAL ANTITRUST MATTERS.

9 (a) IN GENERAL.—There shall be established within

10 the Department of Justice an Assistant Attorney General

11 for Agriculture Competition, who shall be responsible for

12 oversight and coordination of antitrust and related mat13 ters which affect agriculture, directly or indirectly.

14 (b) APPOINTMENT.—The Assistant Attorney General

15 for Agriculture Competition shall be appointed by the

16 President subject to the advice and consent of the Senate.

17 SEC. 5. STATUTORY TRUST FOR THE PROTECTION OF SELL18 ERS OF LIVESTOCK TO MARKET AGENCIES

19 AND LIVESTOCK DEALERS.

20 Title III of the Packers and Stockyards Act, 1921

21 (7 U.S.C. 201 et seq.) is amended by adding at the end

22 the following:

23 ‘‘SEC. 318. LIVESTOCK DEALER TRUST.

24 ‘‘(a) FINDINGS.—Congress finds that—
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1 ‘‘(1) a burden on and obstruction to commerce

2 in livestock is caused by financing arrangements

3 under which dealers encumber, give lenders security

4 interest in, or place liens on, livestock obtained by

5 such persons by purchase in cash sales, or on inven6 tories of or receivables or proceeds from such live7 stock, when payment is not made for livestock; and

8 ‘‘(2) such financing arrangements are contrary

9 to the public interest.

10 ‘‘(b) PURPOSE.—The purpose and intent of this sec11 tion is to remedy such burden on and obstruction to com12 merce in livestock and protect the public interest by cre13 ating a trust for the benefit of unpaid cash sellers of live14 stock.

15 ‘‘(c) DEFINITIONS.—In this section:

16 ‘‘(1) CASH SALE.—The term ‘cash sale’ means

17 a sale in which the seller does not expressly extend

18 credit to the buyer.

19 ‘‘(2) DEALER.—The term ‘dealer’ includes a

20 market agency purchasing livestock on a commission

21 basis, for all purposes under and related to this sec22 tion.

23 ‘‘(3) TRUST CORPUS.—The corpus of a trust es24 tablished under this section shall include the assets
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1 of a dealer that are held for the benefit of all unpaid

2 cash sellers of livestock—

3 ‘‘(A) including—

4 ‘‘(i) all accounts receivable and pro5 ceeds derived from the sale of livestock

6 purchased by the dealer in cash sales; and

7 ‘‘(ii) all livestock inventories of the

8 dealer; and

9 ‘‘(B) not including—

10 ‘‘(i) livestock purchased by a dealer

11 for its own account for feeding in a feedlot

12 or on pasture; and

13 ‘‘(ii) livestock purchased by a bona

14 fide third-party purchaser for value.

15 ‘‘(d) HOLDING IN TRUST.—

16 ‘‘(1) IN GENERAL.—The accounts receivable

17 and proceeds generated from livestock purchased in

18 a cash sale by a dealer, and the inventory of the

19 dealer, shall be held by the dealer in trust for the

20 benefit of all unpaid cash sellers of such livestock

21 until full payment has been received by such unpaid

22 sellers.

23 ‘‘(2) DISHONOR OF INSTRUMENT OF PAY24 MENT.—Payment shall not be considered to have
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1 been made if the seller receives a payment instru2 ment that is dishonored.

3 ‘‘(3) LOSS OF BENEFIT OF TRUST.—The un4 paid seller shall lose the benefit of the trust under

5 paragraph (1) unless the seller gives written notice

6 to the dealer and to the Secretary—

7 ‘‘(A) within 15 business days after the sell8 er has received notice that the payment instru9 ment promptly presented for payment has been

10 dishonored; or

11 ‘‘(B) within 30 days after the final date

12 for making payment under section 409.

13 ‘‘(4) SMALL ENTITY EXEMPTION.—Any dealer

14 whose average annual purchases of livestock do not

15 exceed $250,000 is exempt from the provisions of

16 this section.

17 ‘‘(5) CATTLE FEEDING EXEMPTION.—Pur18 chases by a dealer of livestock for its own account

19 for feeding in a feedlot or on pasture shall not be

20 considered dealer transactions for the purposes of

21 this section.

22 ‘‘(6) RIGHTS OF THIRD PARTY PURCHASER.—

23 The trust established under paragraph (1) shall have

24 no effect on the rights of a bona fide third-party

25 purchaser who has purchased livestock from a dealer
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1 for value, without regard to whether the livestock

2 are delivered to the bona fide purchaser.

3 ‘‘(7) ANIMAL CARE PROVIDER EXEMPTION.—

4 Nothing in this section shall affect the rights of an

5 animal care provider created by statute or common

6 law.

7 ‘‘(e) JURISDICTION.—

8 ‘‘(1) IN GENERAL.—The district courts of the

9 United States shall have jurisdiction in a civil action

10 by—

11 ‘‘(A) the beneficiary of a trust described in

12 subsection (d)(1) to enforce payment of the

13 amount due the seller from the trust funds; and

14 ‘‘(B) the Secretary, to prevent and restrain

15 dissipation of a trust described in subsection

16 (d).

17 ‘‘(2) NO EFFECT ON OTHER REMEDIES.—Noth18 ing in this section shall limit or diminish in any way

19 any other remedy available to a trust beneficiary or

20 to the Secretary under this Act, any other law, or

21 at common law, but the provisions of this section are

22 in addition to such remedies.

23 ‘‘(f) DAMAGES.—If any dealer subject to this section

24 violates any of the provisions of such section, the dealer

25 shall be liable to the person injured thereby for the full
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1 amount of damages sustained as a consequence of such

2 violation.

3 ‘‘(g) PENALTIES.—

4 ‘‘(1) IN GENERAL.—Whoever violates the provi5 sions of this section shall be liable to, and the Sec6 retary may assess, a penalty of not more than

7 $10,000 nor less than $1,000 for each such viola8 tion.

9 ‘‘(2) CONSIDERATIONS.—In determining the

10 amount of the civil penalty to be assessed under this

11 section, the Secretary shall consider the gravity of

12 the offense, the annual purchases of livestock by the

13 person involved, and the effect of the penalty on the

14 person’s ability to continue in business.

15 ‘‘(3) ENFORCEMENT.—If the person against

16 whom a penalty is assessed under this section fails

17 to pay such penalty, the Secretary shall refer the

18 matter to the Attorney General, who shall recover

19 such penalty by an action in the appropriate district

20 court of the United States.’’.

21 SEC. 6. ADDITIONAL RESOURCES FOR DEPARTMENT OF

22 JUSTICE ENFORCEMENT.

23 There are authorized to be appropriated for each of

24 the fiscal years 2001, 2002, and 2003 such sums as are

25 necessary to the Department of Justice to provide addi-
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1 tional staff and assistance for the Assistant Attorney Gen2 eral for Agriculture Competition to carry out the duties

3 of the position.

4 SEC. 7. AUTHORIZATION FOR ADDITIONAL STAFF AND

5 FUNDING FOR THE GRAIN INSPECTION,

6 PACKERS AND STOCKYARDS ADMINISTRA7 TION.

8 There are authorized to be appropriated such sums

9 as are necessary to enhance the capability of the Grain

10 Inspection, Packers and Stockyards Administration to

11 monitor, investigate, and pursue the competitive implica12 tions of structural changes in the meat packing industry.

13 Sums are specifically earmarked to hire litigating attor14 neys to allow the Grain Inspection, Packers and Stock15 yards Administration to more comprehensively and effec16 tively pursue its enforcement activities, especially through

17 regional offices.

18 SEC. 8. GRAIN INSPECTION, PACKERS AND STOCKYARDS

19 ADMINISTRATION APPLICATION TO POUL20 TRY.

21 (a) IN GENERAL.—The Comptroller General shall

22 conduct a study and make findings and recommendations

23 with respect to whether there are disparities in the Grain

24 Inspection, Packers and Stockyard Administration’s ad-
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1 ministrative authority with regard to the poultry, beef, and

2 pork industries and how those disparities can be remedied.

3 (b) REPORT.—The Comptroller General shall submit

4 a report to Congress on the study, findings, and rec5 ommendations required by subsection (a) not later than

6 1 year after the date of enactment of this Act.

7 SEC. 9. UNENFORCEABILITY OF CONFIDENTIALITY

8 CLAUSES IN LIVESTOCK AND POULTRY PRO9 DUCTION CONTRACTS.

10 Confidentiality clauses barring a party to a contract

11 from sharing terms of such contract for the purposes of

12 obtaining legal or financial advice, are unenforceable in

13 livestock production contracts and grain production con14 tracts (except to the extent a legitimate trade secret (as

15 applied in the Freedom of Information Act, 5 U.S.C. 552

16 et seq.) is being protected).

17 SEC. 10. REPARATIONS FOR PRODUCERS HARMED BY

18 PACKERS ENGAGED IN ANTICOMPETITIVE

19 BEHAVIOR.

20 (a) IN GENERAL.—The Grain Inspection, Packers

21 and Stockyard Administration shall establish a trust fund

22 (referred to in this section as the ‘‘trust fund’’) for the

23 benefit of farm producers harmed by packers engaged in

24 anticompetitive behavior.
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1 (b) DEPOSITS.—There shall be deposited in trust

2 fund 50 percent of the amounts received by the Grain In3 spection, Packers and Stockyard Administration from

4 fines and settlements resulting from actions taken against

5 packers engaged in anticompetitive behavior.

6 (c) PAYMENTS.—Amounts in the trust fund may be

7 used by the Secretary of Agriculture for payments to farm

8 producers that are harmed by packers engaged in anti9 competitive behavior to compensate those farm producers

10 for losses resulting from that harm.

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