2000
[DOCID: f:s1076is.txt]
107th CONGRESS
1st Session
S. 1076
To provide for the review of agriculture mergers and acquisitions by
the Department of Agriculture and to outlaw unfair practices in the
agriculture industry, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 21, 2001
Mr. Grassley introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To provide for the review of agriculture mergers and acquisitions by
the Department of Agriculture and to outlaw unfair practices in the
agriculture industry, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Agriculture Competition Enhancement
Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Agricultural commodity.--The term ``agricultural
commodity'' has the meaning given the term in section 102 of
the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
(2) Agricultural cooperative.--The term ``agricultural
cooperative'' means an association of persons that meets the
requirements of the Capper-Volstead Act (7 U.S.C. 291 et seq.;
42 Stat. 388).
(3) Agricultural input supplier.--The term ``agricultural
input supplier'' means any person (excluding agricultural
cooperatives) engaged in the business of selling in commerce,
any product to be used as an input (including seed, germ plasm,
hormones, antibiotics, fertilizer, and chemicals, but excluding
farm machinery) for the production of any agricultural
commodity.
(4) Assistant attorney general.--The term ``Assistant
Attorney General'' means the Assistant Attorney General in
charge of the Antitrust Division of the Department of Justice.
(5) Broker.--The term ``broker'' means any person
(excluding agricultural cooperatives) engaged in the business
of negotiating sales and purchases of any agricultural
commodity in commerce for or on behalf of the vendor or the
purchaser.
(6) Commission merchant.--The term ``commission merchant''
means any person (excluding agricultural cooperatives) engaged
in the business of receiving in commerce any agricultural
commodity for sale, on commission, or for or on behalf of
another.
(7) Dealer.--The term ``dealer'' means any person
(excluding agricultural cooperatives) engaged in the business
of buying, selling, or marketing agricultural commodities in
commerce, except that no person shall be considered a dealer
with respect to sales or marketing of any agricultural
commodity of that person's own raising.
(8) Processor.--The term ``processor'' means any person
(excluding agricultural cooperatives) engaged in the business
of handling, preparing, or manufacturing (including
slaughtering) of an agricultural commodity, or the products of
such agricultural commodity, for sale or marketing in commerce
for human consumption but not with respect to sale or marketing
at the retail level.
(9) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
(10) Special counsel.--The term ``Special Counsel'' means
the Special Counsel for Competition Matters at the Department
of Agriculture.
SEC. 3. SPECIAL COUNSEL FOR COMPETITION MATTERS.
(a) In General.--There shall be established within the Department
of Agriculture a Special Counsel for Competition Matters whose primary
responsibilities shall be to--
(1) analyze mergers within the food and agricultural
sectors, in consultation with the Chief Economist of the
Department of Agriculture, as required by section 4; and
(2) assure that section 5, and the Packers and Stockyards
Act and related authorities, are enforced appropriately.
(b) Appointment.--The Special Counsel for Competition Matters shall
be appointed by the President subject to the advice and consent of the
Senate.
(c) Prosecutorial Authority.--The Special Counsel for Competition
Matters shall have the authority to bring any civil action authorized
pursuant to this Act on behalf of the United States.
SEC. 4. AGRIBUSINESS MERGER REVIEW AND ENFORCEMENT BY THE DEPARTMENT OF
AGRICULTURE.
(a) Notice of Filing.--The Assistant Attorney General or the
Federal Trade Commission, as appropriate, shall notify the Secretary of
Agriculture of any filing pursuant to section 7A of the Clayton Act (15
U.S.C. 18a) involving a merger or acquisition described in subsection
(b)(1), and shall give the Secretary of Agriculture the opportunity to
participate in the review proceedings.
(b) Special Counsel Review.--
(1) In general.--In addition to the antitrust review
conducted by the Federal Trade Commission or Assistant Attorney
General pursuant to section 7A of the Clayton Act (15 U.S.C.
18a), and notwithstanding any participation in those antitrust
review proceedings, the Special Counsel for Competition
Matters, in consultation with the Chief Economist of the
Department of Agriculture, shall, contemporaneously, observing
the time period limitations provided under the antitrust laws
and the Department of Justice merger guidelines, and utilizing
the factors set forth in subsection (d), review, to determine
whether the proposed transaction would cause substantial harm
to the ability of independent producers and family farmers to
compete in the marketplace, any merger or acquisition
involving--
(A) a dealer, processor, commission merchant,
agricultural input supplier, broker, or operator of a
warehouse of agricultural commodities with annual net
sales or total assets of more than $100,000,000 merging
or acquiring, directly or indirectly, any voting
securities or assets of any other dealer, processor, commission
merchant, agricultural input supplier, broker, or operator of a
warehouse of agricultural commodities with annual net sales or total
assets of more than $10,000,000; or
(B) a dealer, processor, commission merchant,
agricultural input supplier, broker, or operator of a
warehouse of agricultural commodities with annual net
sales or total assets of more than $10,000,000 merging
or acquiring, directly or indirectly, any voting
securities or assets of any other dealer, processor,
commission merchant, agricultural input supplier,
broker, or operator of a warehouse of agricultural
commodities with annual net sales or total assets of
more than $100,000,000 if the acquiring person would
hold--
(i) 15 percent or more of the voting
securities or assets of the acquired person; or
(ii) an aggregate total amount of the
voting securities and assets of the acquired
person in excess of $15,000,000.
(2) Exception.--The Special Counsel for Competition
Matters, at his or her discretion, may also request that the
Assistant Attorney General or the Federal Trade Commission
require section 7A of the Clayton Act (15 U.S.C. 18
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a)
notification of an agriculture merger or acquisition of a size
smaller than is required under paragraph (1), if the Special
Counsel for Competition Matters believes that such transaction
will cause substantial harm to the ability of independent
producers and family farmers to compete in the market.
(c) Notification on Failure To Proceed.--If the Assistant Attorney
General or the Federal Trade Commission determines not to proceed
against the parties of an agriculture merger or acquisition under the
antitrust laws, the Assistant Attorney General or the Federal Trade
Commission immediately shall notify the Special Counsel for Competition
Matters of such decision.
(d) Standard of Review.--
(1) In general.--The Special Counsel for Competition
Matters, in consultation with the Chief Economist of the
Department of Agriculture, shall review, and may challenge, a
merger or acquisition described in subsection (b) based on
whether the merger or acquisition would cause substantial harm
to the ability of independent producers and family farmers to
compete in the marketplace.
(2) Factors.--The review shall consider, among other
factors--
(A) the effect of the acquisition or merger on
prices paid to producers who sell to, buy from, or
bargain with, one or more of the parties involved in
the merger or acquisition;
(B) the likelihood that the acquisition or merger
will result in significantly increased market power for
the new or surviving entity;
(C) the likelihood that the acquisition or merger
will increase the potential for anticompetitive or
predatory conduct by the new or surviving entity; and
(D) whether the acquisition or merger will
adversely affect producers in a particular regional
area, including an area as small as a single State.
(e) Evidentiary Powers.--The Special Counsel for Competition
Matters shall have the same powers as possessed by the Assistant
Attorney General and the Federal Trade Commission under the antitrust
laws, to obtain evidence necessary to make determinations for the
review described in subsection (b).
(f) Access to Attorney General and Federal Trade Commission
Information.--The Assistant Attorney General or the Federal Trade
Commission, as appropriate, shall make available to the Special Counsel
for Competition Matters any information, including any testimony,
documentary material, or related information relevant to the review
conducted by the Special Counsel under this section which is under the
control of the Assistant Attorney General or the Federal Trade
Commission. Each agency will share information, consistent with
applicable confidentiality restrictions, in order to provide the others
with information believed to be potentially relevant and useful to the
others' enforcement responsibilities. Such information may include
legal, economic, and technical assistance.
(g) Transmittal of Findings of Special Counsel for Competition
Matters.--After receiving notice pursuant to subsection (a) and
conducting the review required in subsection (b), the Secretary of
Agriculture shall report to the Assistant Attorney General or the
Federal Trade Commission, as appropriate, and the parties, the findings
of the review, including any recommended conditions on the merger or
suggested remedies.
(h) Response to Special Counsel Findings.--
(1) Antitrust agency response to findings.--The Assistant
Attorney General or the Federal Trade Commission, as
appropriate, shall provide the Special Counsel for Competition
Matters a response, including the rationale as to why such
findings and recommendations are accepted or rejected.
(2) Party opportunity to address findings.--The parties to
the merger or acquisition affected by such findings shall have
the opportunity to make changes to their operations or
structure, and to negotiate with the Special Counsel for
Competition Matters an acceptable resolution to any concerns
raised in the findings.
(i) Enforcement.--
(1) Judicial action.--Not later than 30 days after
notification by the Assistant Attorney General or the Federal
Trade Commission of their determination not to proceed against
the parties, the Special Counsel for Competition Matters, if he
or she is not satisfied with the review of, or the conditions
placed on, the merger or acquisition by the Assistant Attorney
General or the Federal Trade Commission, may challenge the
transaction in Federal court based on the findings conducted in
the review under this section.
(2) Enforcement and damages.--The enforcement and damage
provisions of the antitrust laws shall apply with respect to a
violation of the substantial harm to producers and family
farmers standard of subsection (d) in the same manner as such
sections apply with respect to a violation of the antitrust
laws.
(j) Conforming Amendments to Antitrust Laws.--Section 7A of the
Clayton Act (15 U.S.C. 18a) is amended by inserting at the end the
following:
``(k)(1) Notwithstanding the threshold requirements of sections 1,
2, and 3, the Federal Trade Commission and the Assistant Attorney
General may require, at the request of the Secretary of Agriculture,
notification pursuant to the rules under subsection (d)(1) from the
parties to a proposed merger or acquisition in the agriculture
industry.
``(2) The Assistant Attorney General or the Federal Trade
Commission, as appropriate, shall give the Secretary of Agriculture the
opportunity to participate in the review under the antitrust laws of
any proposed merger or acquisition involving the agriculture
industry.''.
SEC. 5. PROHIBITIONS AGAINST UNFAIR PRACTICES IN TRANSACTIONS INVOLVING
AGRICULTURAL COMMODITIES AND ENFORCEMENT.
(a) Unlawful Practices.--It shall be unlawful for any dealer,
processor, commission merchant, or broker of any agricultural commodity
to--
(1) engage in or use any unfair, unjustly discriminatory,
or deceptive practice or device;
(2) make or give any undue or unreasonable preference or
advantage to any particular person or locality in any respect
whatsoever, or subject any particular person or locality to any
undue or unreasonable prejudice or disadvantage;
(3) sell or otherwise transfer to or for any other dealer,
processor, commission merchant, or broker, or buy or otherwise
receive from or for any other dealer, processor, commission
merchant, or broker, any article for the purpose or with the
effect of apportioning the supply between any such persons, if
such apportionment has the tendency or effect of restraining
commerce or of creating a monopoly;
(4) sell or otherwise transfer to or for any other person,
or buy or otherwise receive from or for any other person, any
article for the purpose or with the effect of manipulating or
controlling prices, or of creating a monopoly in the
acquisition of, buying, selling, or dealing in, any article, or
of restraining commerce;
(5) engage in any course of business or do any act for the
purpose or with the effect of manipulating or controlling
prices, or of creating a monopoly in the acquisition of,
buying, selling, or dealing in, any article, or of restraining
commerce;
(6) conspire, combine, agree, or arrange with any other
person--
(A) to apportion territory for carrying on
business;
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(B) to apportion purchases or sales of any article;
or
(C) to manipulate or control prices; or
(7) conspire, combine, agree, or arrange with any other
person to do, or aid or abet the doing of, any act made
unlawful by paragraph (1), (2), (3), (4), or (5).
(b) Procedure Before Secretary for Violations.--
(1) Complaint; hearing; intervention.--If the Secretary has
reason to believe that any dealer, processor, commission
merchant, or broker, has violated or is violating any provision
of this section, the Secretary shall cause a complaint in
writing to be served upon the dealer, processor, commission
merchant, or broker, stating the charges in that respect, and
requiring the dealer, processor, commission merchant, or
broker, to attend and testify at a hearing at a time and place
designated therein, at least 30 days after the service of such
complaint; and at such time and place there shall be afforded
the dealer, processor, commission merchant, or broker, a
reasonable opportunity to be informed as to the evidence
introduced against him (including the right of cross-
examination), and to be heard in person or by counsel and
through witnesses, under such regulations as the Secretary may
prescribe. Any person for good cause shown may on application
be allowed by the Secretary to intervene in such proceeding,
and appear in person or by counsel. At any time prior to the
close of the hearing the Secretary may amend the complaint; but
in case of any amendment adding new charges the hearing shall,
on the request of the dealer, processor, commission merchant,
or broker, be adjourned for a period not exceeding 15 days.
(2) Report and order; penalty.--If, after such hearing, the
Secretary finds that the dealer, processor, commission
merchant, or broker, has violated or is violating any
provisions of this section covered by the charges, the
Secretary shall make a report in writing in which the Secretary shall
state his findings as to the facts, and shall issue and cause to be
served on the dealer, processor, commission merchant, or broker, an
order requiring such dealer, processor, commission merchant, or broker,
to cease and desist from continuing such violation. The testimony taken
at the hearing shall be reduced to writing and filed in the records of
the Department of Agriculture. The Secretary may also assess a civil
penalty of not more than $10,000 for each such violation. In
determining the amount of the civil penalty to be assessed under this
section, the Secretary shall consider the gravity of the offense, the
size of the business involved, and the effect of the penalty on the
person's ability to continue in business. If, after the lapse of the
period allowed for appeal or after the affirmance of such penalty, the
person against whom the civil penalty is assessed fails to pay such
penalty, the Secretary may proceed to recover such penalty by an action
in the appropriate district court of the United States.
(3) Amendment of report or order.--Until the record in such
hearing has been filed in a court of appeals of the United
States, as provided in subsection (c), the Secretary at any
time, upon such notice and in such manner as the Secretary
deems proper, but only after reasonable opportunity to the
dealer, processor, commission merchant, or broker, to be heard,
may amend or set aside the report or order, in whole or in
part.
(4) Service of process.--Complaints, orders, and other
processes of the Secretary under this section may be served in
the same manner as provided in section 5 of the Federal Trade
Commission Act (15 U.S.C. 45).
(c) Conclusiveness of Order; Appeal and Review.--
(1) Filing of petition; bond.--An order made under
subsection (b) shall be final and conclusive unless within 30
days after service the dealer, processor, commission merchant,
or broker, appeals to the court of appeals for the circuit in
which he has his principal place of business, by filing with
the clerk of such court a written petition praying that the
Secretary's order be set aside or modified in the manner stated
in the petition, together with a bond in such sum as the court
may determine, conditioned that such dealer, processor,
commission merchant, or broker, will pay the costs of the
proceedings if the court so directs.
(2) Filing of record by secretary.--The clerk of the court
shall immediately cause a copy of the petition to be delivered
to the Secretary, and the Secretary shall thereupon file in the
court the record in such proceedings, as provided in section
2112 of title 28, United States Code. If before such record is
filed the Secretary amends or sets aside his report or order,
in whole or in part, the petitioner may amend the petition
within such time as the court may determine, on notice to the
Secretary.
(3) Temporary injunction.--At any time after such petition
is filed, the court, on application of the Secretary, may issue
a temporary injunction, restraining, to the extent it deems
proper, the dealer, processor, commission merchant, or broker,
and his officers, directors, agents, and employees, from
violating any of the provisions of the order pending the final
determination of the appeal.
(4) Evidence.--The evidence so taken or admitted, and filed
as aforesaid as a part of the record, shall be considered by
the court as the evidence in the case.
(5) Action by the court.--The court may affirm, modify, or
set aside the order of the Secretary.
(6) Additional evidence.--If the court determines that the
just and proper disposition of the case requires the taking of
additional evidence, the court shall order the hearing to be
reopened for the taking of such evidence, in such manner and
upon such terms and conditions as the court may deem proper.
The Secretary may modify his findings as to the facts, or make
new findings, by reason of the additional evidence so taken,
and the Secretary shall file such modified or new findings and
his recommendations, if any, for the modifications or setting
aside of his order, with the return of such additional
evidence.
(7) Injunction.--If the court of appeals affirms or
modifies the order of the Secretary, its decree shall operate
as an injunction to restrain the dealer, processor, commission
merchant, or broker, and his officers, directors, agents, and
employees from violating the provisions of such order or such
order as modified.
(8) Finality.--The court of appeals shall have
jurisdiction, which upon the filing of the record with it shall
be exclusive, to review, and to affirm, set aside, or modify,
such orders of the Secretary, and the decree of such court
shall be final except that it shall be subject to review by the
Supreme Court of the United States upon certiorari, as provided
in section 1254 of title 28, United States Code, if such writ
is duly applied for within 60 days after entry of the decree.
The issue of such writ shall not operate as a stay of the
decree of the court of appeals, insofar as such decree operates
as an injunction unless so ordered by the Supreme Court.
(d) Punishment for Violation of Order.--Any dealer, processor,
commission merchant, or broker, or any officer, director, agent, or
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employee of a dealer, processor, commission merchant, or broker, who
fails to obey any order of the Secretary issued under the provisions of
subsection (b), or such order as modified--
(1) after the expiration of the time allowed for filing a
petition in the court of appeals to set aside or modify such
order, if no such petition has been filed within such time;
(2) after the expiration of the time allowed for applying
for a writ of certiorari, if such order, or such order as
modified, has been sustained by the court of appeals and no
such writ has been applied for within such time; or
(3) after such order, or such order as modified, has been
sustained by the courts as provided in subsection (c);
shall on conviction be fined not less than $500 nor more than $10,000,
or imprisoned for not less than 6 months nor more than 5 years, or
both. Each day during which such failure continues shall be deemed a
separate offense.
SEC. 6. REPORT ON CORPORATE STRUCTURE.
A dealer, processor, commission merchant, or broker with annual
sales in excess of $100,000,000 shall annually file with the Secretary
a report which describes, with respect to both domestic and foreign
activities, the strategic alliances, ownership in other agribusiness
firms or agribusiness-related firms, joint ventures, subsidiaries, and
brand names, interlocking boards of directors with other corporations,
representatives, and agents that lobby Congress on behalf of such
dealer, processor, commission merchant, or broker, as determined by the
Secretary.
SEC. 7. PROHIBITION ON CONFIDENTIALITY CLAUSES IN LIVESTOCK AND POULTRY
PRODUCTION CONTRACTS.
Confidentiality clauses barring a party to a contract from sharing
terms of such contract for the purposes of obtaining legal or financial
advice, are prohibited in livestock production contracts and grain
production contracts (except to the extent a legitimate trade secret
(as applied in the Freedom of Information Act, 5 U.S.C. 552 et seq.) is
being protected).
SEC. 8. PROTECTIONS FOR CONTRACT POULTRY GROWERS.
(a) Removal of Poultry Slaughter Requirement From Definitions.--
Section 2(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 182) is
amended--
(1) by striking paragraph (8) and inserting the following
new paragraph:
``(8) the term `poultry grower' means any person engaged in
the business of raising or caring for live poultry under a
poultry growing arrangement, whether the poultry is owned by
such person or by another person;'';
(2) in paragraph (9), by striking ``and cares for live
poultry for delivery, in accord with another's instructions,
for slaughter'' and inserting ``or cares for live poultry in
accord with another person's instructions''; and
(3) in paragraph (10), by striking ``for the purpose of
either slaughtering it or selling it for slaughter by
another''.
(b) Administrative Enforcement Authority Over Live Poultry
Dealers.--Sections 203, 204, and 205 of such Act (7 U.S.C. 193, 194,
195) are amended by inserting ``or live poultry dealer'' after
``packer'' each place it appears.
(c) Authority To Request Temporary Injunction or Restraining
Order.--Section 408 of such Act (7 U.S.C. 229) is amended by striking
``on account of poultry'' and inserting ``on account of poultry or
poultry care''.
(d) Violations by Live Poultry Dealers.--Section 411 of such Act (7
U.S.C. 228b-2) is amended--
(1) in subsection (a), by striking ``any provision of
section 207 or section 410 of''; and
(2) in subsection (b), by striking ``any provisions of
section 207 or section 410'' and inserting ``any provision''.
SEC. 9. AUTHORITY TO MAKE BUSINESS AND INDUSTRY GUARANTEED LOANS FOR
FARMER-OWNED PROJECTS THAT ADD VALUE TO OR PROCESS
AGRICULTURAL PRODUCTS.
Section 310B(a)(1) of the Consolidated Farm and Rural Development
Act (7 U.S.C. 1932(a)(1)) is amended by inserting ``(and in areas other
than rural communities, in the case of insured loans, if a majority of
the project involved is owned by individuals who reside and have
farming operations in rural communities, and the project adds value to
or processes agricultural commodities)'' after ``rural communities''.
SEC. 10. AUTHORIZATION FOR ADDITIONAL STAFF AND FUNDING FOR AGRICULTURE
COMPETITION ENFORCEMENT.
(a) Additional Staff.--The Secretary of Agriculture shall hire
sufficient staff, including antitrust and litigation attorneys,
economists, and investigators, to appropriately carry out the
agribusiness merger review and prohibition against unfair practices
responsibilities, described in sections 4 and 5.
(b) Authorization.--There are authorized to be appropriated such
sums as are necessary to hire the staff referenced in subsection (a) to
implement this Act.
SEC. 11. AUTHORIZATION FOR ADDITIONAL STAFF AND FUNDING FOR THE GRAIN
INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION.
There are authorized to be appropriated such sums as are necessary
to enhance the capability of the Grain Inspection, Packers and
Stockyards Administration to monitor, investigate, and pursue the
competitive implications of structural changes in the meat packing
industry. Sums are specifically earmarked to hire litigating attorneys
to allow the Grain Inspection, Packers and Stockyards Administration to
more comprehensively and effectively pursue its enforcement activities.
SEC. 12. ASSISTANT ATTORNEY GENERAL FOR AGRICULTURAL ANTITRUST MATTERS.
(a) In General.--There shall be established within the Antitrust
Division of the Department of Justice an Assistant Attorney General for
Agricultural Antitrust Matters, who shall be responsible for oversight
and coordination of antitrust and related matters which affect
agriculture, directly or indirectly.
(b) Appointment.--The Assistant Attorney General for Agricultural
Antitrust Matters shall be appointed by the President subject to the
advice and consent of the Senate.
SEC. 13. INCREASE IN HART-SCOTT-RODINO FILING FEES.
(a) In General.--The filing fee the Federal Trade Commission
assesses on a person acquiring voting securities or assets who is
required to file premerger notifications under section 7A of the
Clayton Act (15 U.S.C. 18a) for mergers and acquisitions satisfying the
$15,000,000 size-of-transaction requirement is increased to $100,000
for those transactions valued at more than $100,000,000.
(b) Fees Earmarked.--The filing fee increase described in
subsection (a) is partially earmarked to pay for the costs of staff
increases at the Transportation, Energy and Agriculture section at the
Department of Justice, as considered necessary by the Assistant
Attorney General, to enhance their review of agriculture transactions.
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