II

106TH CONGRESS

1ST SESSION S. 1739

To impose a moratorium on large agribusiness mergers and to establish

a commission to review large agriculture mergers, concentration, and

market power.

IN THE SENATE OF THE UNITED STATES

OCTOBER 15, 1999

Mr. WELLSTONE (for himself, Mr. DORGAN, Mr. DASCHLE, Mr. FEINGOLD,

Mr. HARKIN, Mr. JOHNSON, and Mr. LEAHY) introduced the following

bill; which was read twice and referred to the Committee on the Judiciary

A BILL

To impose a moratorium on large agribusiness mergers and

to establish a commission to review large agriculture

mergers, concentration, and market power.

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 ‘‘Agribusiness Merger

5 Moratorium and Antitrust Review Act of 1999’’.

6 SEC. 2. FINDINGS.

7 Congress finds the following:

8 (1) Concentration in the agricultural economy

9 including mergers, acquisitions, and other combina-
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1 tions and alliances among suppliers, producers,

2 packers, other food processors, and distributors has

3 been accelerating at a rapid pace in the 1990’s.

4 (2) The trend toward greater concentration in

5 agriculture has important and far-reaching implica6 tions not only for family-based farmers, but also for

7 the food we eat, the communities we live in, and the

8 integrity of the natural environment upon which we

9 all depend.

10 (3) In the past decade and a half, the top 4

11 largest pork packers have seized control of some 57

12 percent of the market, up from 36 percent. Over the

13 same period, the top 4 beef packers have expanded

14 their market share from 32 percent to 80 percent,

15 the top 4 flour millers have increased their market

16 share from 40 percent to 62 percent, and the market

17 share of the top 4 soybean crushers has jumped

18 from 54 percent to 80 percent.

19 (4) Today the top 4 sheep, poultry, wet corn,

20 and dry corn processors now control 73 percent, 55

21 percent, 74 percent, and 57 percent of the market,

22 respectively.

23 (5) A handful of firms dominate the processing

24 of every major commodity. Many of them are

25 vertically integrated, which means that they control
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1 successive stages of the food chain, from inputs to

2 production to distribution.

3 (6) Growing concentration of the agricultural

4 sector has restricted choices for farmers trying to

5 sell their products. As the bargaining power of agri6 business firms over farmers increases, agricultural

7 commodity markets are becoming stacked against

8 the farmer.

9 (7) The farmer’s share of every retail dollar has

10 plummeted from around 50 percent in 1952, to less

11 than 25 percent today, while the profit share for

12 farm input, marketing, and processing companies

13 has risen.

14 (8) While agribusiness conglomerates are post15 ing record earnings, farmers are facing desperate

16 times. The commodity price index is the lowest since

17 1987. Hog prices are at their lowest since 1972.

18 Cotton and soybean prices are the lowest they have

19 been since the early 1970’s.

20 (9) The benefits of low commodity prices are

21 not being passed on to American consumers. The

22 gap between what shoppers pay for food and what

23 farmers are paid is growing wider. From 1984 to

24 1998, prices paid to farmers fell 36 percent, while
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1 consumer food prices actually increased by 3 per2 cent.

3 (10) Concentration, low prices, anticompetitive

4 practices, and other manipulations and abuses of the

5 agricultural economy are driving family-based farm6 ers out of business. Farmers are going bankrupt or

7 giving up, and few are taking their places; more

8 farm families are having to rely on other jobs to stay

9 afloat; and the number of farmers leaving the land

10 will continue to increase unless and until these

11 trends are reversed.

12 (11) The decline of family-based agriculture un13 dermines the economies of rural communities across

14 America; it has pushed Main Street businesses, from

15 equipment suppliers to insurance sales people, out of

16 business or to the brink of insolvency.

17 (12) Increased concentration in the agribusiness

18 sector has a harmful effect on the environment; cor19 porate hog farming, for example, threatens the in20 tegrity of local water supplies and creates noxious

21 odors in neighboring communities. Concentration

22 also can increase the risks to food safety and limit

23 the biodiversity of plants and animals.

24 (13) The decline of family-based farming poses

25 a direct threat to American families and family val-
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1 ues, by subjecting farm families to turmoil and

2 stress.

3 (14) The decline of family-based farming causes

4 the demise of rural communities, as stores lose cus5 tomers, churches lose congregations, schools and

6 clinics become under-used, career opportunities for

7 young people dry up, and local inequalities of wealth

8 and income grow wider.

9 (15) These developments are not the result of

10 inevitable market forces. Its problems arise rather

11 from policies made in Washington, including farm,

12 antitrust, and trade policies.

13 (16) To restore competition in the agricultural

14 economy, and to increase the bargaining power and

15 enhance economic prospects for family-based farm16 ers, the trend toward concentration must be re17 versed.

18 SEC. 3. DEFINITIONS.

19 In this Act:

20 (1) BROKER.—The term ‘‘broker’’ means any

21 person engaged in the business of negotiating sales

22 and purchases of any agricultural commodity in

23 interstate or foreign commerce for or on behalf of

24 the vendor or the purchaser, except that no person

25 shall be considered a broker if the only sales of such
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1 commodities are for a value less than $10,000,000

2 per year.

3 (2) COMMISSION MERCHANT.—The term ‘‘com4 mission merchant’’ means any person engaged in the

5 business of receiving in interstate or foreign com6 merce any agricultural commodity for sale, on com7 mission, or for or on behalf of another, except that

8 no person shall be considered a commission mer9 chant if the only sales of such commodities are for

10 a value less than $10,000,000 per year.

11 (3) DEALER.—The term ‘‘dealer’’ means any

12 person (excluding agricultural cooperatives) engaged

13 in the business of buying, selling, or marketing agri14 cultural commodities in interstate or foreign com15 merce, except that—

16 (A) no person shall be considered a dealer

17 with respect to sales or marketing of any agri18 cultural commodity of that person’s own rais19 ing; and

20 (B) no person shall be considered a dealer

21 if the only sales of such commodities are for a

22 value less than $10,000,000 per year.

23 (4) AGRICULTURAL INPUT SUPPLIER.—The

24 term ‘‘agricultural input supplier’’ means any person

25 engaged in the business of selling, in interstate or
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1 foreign commerce, any product to be used as an

2 input (including seed, germ plasm, hormones, anti3 biotics, fertilizer, and chemicals, but excluding farm

4 machinery) for the production of any agricultural

5 commodity, except that no person shall be consid6 ered an agricultural input supplier if sales of such

7 products are for a value less than $10,000,000 per

8 year.

9 (5) PROCESSOR.—The term ‘‘processor’’ means

10 any person (excluding agricultural cooperatives) en11 gaged in the business of handling, preparing, or

12 manufacturing (including slaughtering) of an agri13 cultural commodity, or the products of such agricul14 tural commodity, for sale or marketing for human

15 consumption, except that no person shall be consid16 ered a processor if the only sales of such products

17 are for a value less than $10,000,000 per year.

18 TITLE I—MORATORIUM ON

19 LARGE AGRIBUSINESS MERG20 ERS

21 SEC. 101. MORATORIUM ON LARGE AGRIBUSINESS MERG22 ERS.

23 (a) IN GENERAL.—
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1 (1) MORATORIUM.—Until the date referred to

2 in paragraph (2) and except as provided in sub3 section (b)—

4 (A) no dealer, processor, commission mer5 chant, agricultural input supplier, broker, or

6 operator of a warehouse of agricultural com7 modities with annual net sales or total assets of

8 more than $100,000,000 shall merge or ac9 quire, directly or indirectly, any voting securi10 ties or assets of any other dealer, processor,

11 commission merchant, agricultural input sup12 plier, broker, or operator of a warehouse of ag13 ricultural commodities with annual net sales or

14 total assets of more than $10,000,000; and

15 (B) no dealer, processor, commission mer16 chant, agricultural input supplier, broker, or

17 operator of a warehouse of agricultural com18 modities with annual net sales or total assets of

19 more than $10,000,000 shall merge or acquire,

20 directly or indirectly, any voting securities or

21 assets of any other dealer, processor, commis22 sion merchant, agricultural input supplier,

23 broker, or operator of a warehouse of agricul24 tural commodities with annual net sales or total
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1 assets of more than $100,000,000 if the acquir2 ing person would hold—

3 (i) 15 percent or more of the voting

4 securities or assets of the acquired person;

5 or

6 (ii) an aggregate total amount of the

7 voting securities and assets of the acquired

8 person in excess of $15,000,000.

9 (2) DATE.—The date referred to in this para10 graph is the earlier of—

11 (A) the effective date of comprehensive

12 legislation—

13 (i) addressing the problem of market

14 concentration in the agricultural sector;

15 and

16 (ii) containing a section stating that

17 the legislation is comprehensive legislation

18 as provided in section 101 of the Agri19 business Merger Moratorium and Antitrust

20 Review Act of 1999; or

21 (B) the date that is 18 months after the

22 date of enactment of this Act.

23 (b) WAIVER AUTHORITY.—The Attorney General

24 shall have authority to waive the moratorium imposed by

25 subsection (a) only under extraordinary circumstances,
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1 such as insolvency or similar financial distress of 1 of the

2 affected parties.

3 TITLE II—AGRICULTURE CON4 CENTRATION AND MARKET

5 POWER REVIEW COMMISSION

6 SEC. 201. ESTABLISHMENT OF COMMISSION.

7 (a) ESTABLISHMENT.—There is established a com8 mission to be known as the Agriculture Concentration and

9 Market Power Review Commission (hereafter in this title

10 referred to as the ‘‘Commission’’).

11 (b) PURPOSES.—The purpose of the Commission is

12 to—

13 (1) study the nature and consequences of con14 centration in America’s agricultural economy; and

15 (2) make recommendations on how to change

16 underlying antitrust laws and other Federal laws

17 and regulations to keep a fair and competitive agri18 culture marketplace for family farmers, other small

19 and medium sized agriculture producers, generally,

20 and the communities of which they are a part.

21 (c) MEMBERSHIP OF COMMISSION.—

22 (1) COMPOSITION.—The Commission shall be

23 composed of 12 members as follows:

24 (A) Three persons, one of whom shall be a

25 person currently engaged in farming or ranch-
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1 ing, shall be appointed by the President pro

2 tempore of the Senate upon the recommenda3 tion of the Majority Leader of the Senate, after

4 consultation with the Chairman of the Com5 mittee on Agriculture, Nutrition, and Forestry.

6 (B) Three persons, one of whom shall be

7 a person currently engaged in farming or

8 ranching, shall be appointed by the President

9 pro tempore of the Senate upon the rec10 ommendation of the Minority Leader of the

11 Senate, after consultation with the ranking mi12 nority member of the Committee on Agri13 culture, Nutrition, and Forestry.

14 (C) Three persons, one of whom shall be a

15 person currently engaged in farming or ranch16 ing, shall be appointed by the Speaker of the

17 House of Representatives, after consultation

18 with the Chairman of the Committee on Agri19 culture.

20 (D) Three persons, one of whom shall be

21 a person currently engaged in farming or

22 ranching, shall be appointed by the Minority

23 Leader of the House of Representatives, after

24 consultation with the ranking minority member

25 of the Committee on Agriculture.
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1 (2) QUALIFICATIONS OF MEMBERS.—

2 (A) APPOINTMENTS.—Persons who are ap3 pointed under paragraph (1) shall be persons

4 who—

5 (i) have experience in farming or

6 ranching, expertise in agricultural econom7 ics and antitrust, or have other pertinent

8 qualifications or experience relating to ag9 riculture and agriculture industries; and

10 (ii) are not officers or employees of

11 the United States.

12 (B) OTHER CONSIDERATION.—In appoint13 ing Commission members, every effort shall be

14 made to ensure that the members—

15 (i) are representative of a broad cross

16 sector of agriculture and antitrust perspec17 tives within the United States; and

18 (ii) provide fresh insights to analyzing

19 the causes and impacts of concentration in

20 agriculture industries and sectors.

21 (d) PERIOD OF APPOINTMENT; VACANCIES.—

22 (1) IN GENERAL.—Members shall be appointed

23 not later than 60 days after the date of enactment

24 of this Act and the appointment shall be for the life

25 of the Commission.
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1 (2) VACANCIES.—Any vacancy in the Commis2 sion shall not affect its powers, but shall be filled in

3 the same manner as the original appointment.

4 (e) INITIAL MEETING.—Not later than 30 days after

5 the date on which all members of the Commission have

6 been appointed, the Commission shall hold its first meet7 ing.

8 (f) MEETINGS.—The Commission shall meet at the

9 call of the Chairperson.

10 (g) CHAIRPERSON AND VICE CHAIRPERSON.—The

11 members of the Commission shall elect a chairperson and

12 vice chairperson from among the members of the Commis13 sion.

14 (h) QUORUM.—A majority of the members of the

15 Commission shall constitute a quorum for the transaction

16 of business.

17 (i) VOTING.—Each member of the Commission shall

18 be entitled to 1 vote, which shall be equal to the vote of

19 every other member of the Commission.

20 SEC. 202. DUTIES OF THE COMMISSION.

21 (a) IN GENERAL.—The Commission shall be respon22 sible for examining the nature, the causes, and con23 sequences concentration in America’s agricultural econ24 omy in the broadest possible terms.
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1 (b) ISSUES TO BE ADDRESSED.—The study shall in2 clude an examination of the following matters:

3 (1) The nature and extent of concentration in

4 the agricultural sector, including food production,

5 transportation, processing, distribution and mar6 keting, and farm inputs such as machinery, fer7 tilizer, and seeds.

8 (2) Current trends in concentration of the agri9 cultural sector and what this sector is likely to look

10 like in the near and longer term future.

11 (3) The effect of this concentration on farmer

12 income.

13 (4) The impacts of this concentration upon

14 rural communities, rural economic development, and

15 the natural environment.

16 (5) The impacts of this concentration upon food

17 shoppers, including the reasons that Depression-level

18 farm prices have not resulted in corresponding drops

19 in supermarket prices.

20 (6) The productivity of family-based farm units,

21 compared with corporate based agriculture, and

22 whether farming is approaching a scale that is larg23 er than necessary from the standpoint of produc24 tivity.
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1 (7) The effect of current laws and administra2 tive practices in supporting and encouraging this

3 concentration.

4 (8) Whether the existing antitrust laws provide

5 adequate safeguards against, and remedies for, the

6 impacts of concentration upon family-based agri7 culture, the communities they comprise, and the

8 food shoppers of this Nation.

9 (9) Accurate and reliable data on the national

10 and international markets shares of multinational

11 agribusinesses, and the portion of their sales attrib12 utable to exports.

13 (10) Barriers that inhibit entry of new competi14 tors into markets for the processing of agricultural

15 commodities, such as the meat packing industry.

16 (11) The extent to which developments, such as

17 formula pricing, marketing agreements, and forward

18 contracting tend to give processors, agribusinesses,

19 and other buyers of agricultural commodities addi20 tional market power over producers and suppliers in

21 local markets.

22 (12) Such related matters as the Commission

23 determines to be important.
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1 SEC. 203. FINAL REPORT.

2 (a) IN GENERAL.—Not later than 12 months after

3 the date of the initial meeting of the Commission, the

4 Commission shall submit to the President and Congress

5 a final report which contains—

6 (1) the findings and conclusions of the Commis7 sion described in section 202; and

8 (2) recommendations for addressing the prob9 lems identified as part of the Commission’s analysis.

10 (b) SEPARATE VIEWS.—Any member of the Commis11 sion may submit additional findings and recommendations

12 as part of the final report.

13 SEC. 204. POWERS OF COMMISSION.

14 (a) HEARINGS.—The Commission may hold such

15 hearings, sit and act at such times and places, take such

16 testimony, and receive such evidence as the Commission

17 may find advisable to fulfill the requirements of this title.

18 The Commission shall hold at least 1 or more hearings

19 in Washington, D.C., and 4 in different agriculture re20 gions of the United States.

21 (b) INFORMATION FROM FEDERAL AGENCIES.—The

22 Commission may secure directly from any Federal depart23 ment or agency such information as the Commission con24 siders necessary to carry out the provisions of this title.

25 Upon request of the Chairperson of the Commission, the
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1 head of such department or agency shall furnish such in2 formation to the Commission.

3 (c) POSTAL SERVICES.—The Commission may use

4 the United States mails in the same manner and under

5 the same conditions as other departments and agencies of

6 the Federal Government.

7 SEC. 205. COMMISSION PERSONNEL MATTERS.

8 (a) COMPENSATION OF MEMBERS.—Each member of

9 the Commission shall be compensated at a rate equal to

10 the daily equivalent of the annual rate of basic pay pre11 scribed for level IV of the Executive Schedule under sec12 tion 5315 of title 5, United States Code, for each day (in13 cluding travel time) during which such member is engaged

14 in the performance of the duties of the Commission.

15 (b) TRAVEL EXPENSES.—The members of the Com16 mission shall be allowed travel expenses, including per

17 diem in lieu of subsistence, at rates authorized for employ18 ees of agencies under subchapter I of chapter 57 of title

19 5, United States Code, while away from their homes or

20 regular places of business in the performance of services

21 for the Commission.

22 (c) STAFF.—

23 (1) IN GENERAL.—The Chairperson of the

24 Commission may, without regard to the civil service

25 laws and regulations, appoint and terminate an exec-
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1 utive director and such other additional personnel as

2 may be necessary to enable the Commission to per3 form its duties. The employment of an executive di4 rector shall be subject to confirmation by the Com5 mission.

6 (2) COMPENSATION.—The Chairperson of the

7 Commission may fix the compensation of the execu8 tive director and other personnel without regard to

9 the provisions of chapter 51 and subchapter III of

10 chapter 53 of title 5, United States Code, relating

11 to classification of positions and General Schedule

12 pay rates, except that the rate of pay for the execu13 tive director and other personnel may not exceed the

14 rate payable for level V of the Executive Schedule

15 under section 5316 of such title.

16 (d) DETAIL OF GOVERNMENT EMPLOYEES.—Any

17 Federal Government employee shall be detailed to the

18 Commission without reimbursement, and such detail shall

19 be without interruption or loss of civil service status or

20 privilege.

21 (e) PROCUREMENT OF TEMPORARY AND INTERMIT22 TENT SERVICES.—The Chairperson of the Commission

23 may procure temporary and intermittent services under

24 section 3109(b) of title 5, United States Code, at rates

25 for individuals which do not exceed the daily equivalent
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1 of the annual rate of basic pay prescribed for level V of

2 the Executive Schedule under section 5316 of such title.

3 SEC. 206. SUPPORT SERVICES.

4 The Administrator of the General Services Adminis5 tration shall provide to the Commission on a reimbursable

6 basis such administrative support services as the Commis7 sion may request.

8 SEC. 207. AUTHORIZATION OF APPROPRIATIONS.

9 There are authorized to be appropriated $2,000,000

10 to the Commission as required by this title to carry out

11 the provisions of this title.

Æ