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Sleeping With The Fishes

If mega-biz is to be believed, the new antitrust chief in the Obama Department of Justice, Christine A. Varney, is really a hurricane whose chief ambition is to demolish the very foundations of modern American business.

If the Wall Street Journal is to be believed, Varney’s first public comments on antitrust, offered in her May 12 speech, was “the Beltway version of a large fish wrapped in newspaper. The message: The Bush era’s laissez-faire M&A (merger and acquisition) oversight is over.”

And, if you listen to Varney and her assistant, Philip Weiser, maybe neither one of those descriptions – despite the hyperbole – is hyperbole.

Here’s Varney, in that May 12 speech: “There is no adequate substitute for a competitive market, particularly during times of economic distress. Vigorous antitrust enforcement must play a significant role in the government’s response to economic crises to ensure that markets remain competitive.”

How? In an appearance before the annual meeting of the Organization for Competitive Markets Aug. 7 in St. Louis, Varney’s deputy, Philip Weiser, pulled out the antitrust elephant gun not seen in decades: the Sherman Antitrust Act.

Calling the 1890 law “the Magna Carta of free enterprise,” Weiser explained that Varney and DOJ will use this “single-page law” to address “both traditional markets and the challenges to competition in our modern, high-technology economy.”

If that sounds like DOJ intends to measure the competitive behaviour of both old-line, blood-on-the-floor industries like meat packers and very new-line, genes-in-the-bag seed giants that’s exactly so, said Weiser in St. Louis.

And DOJ’s yardstick for both measurements will be the same, he explained. “Many of the ongoing marketplace and technological changes promote efficiencies and benefit consumers.”

So, if what you’re doing in the market benefits consumers – not just Big Agbiz – sleep tight.

But, “At the same time,” Weiser added, “we are aware that there are important concerns about the competitive consequences of how the marketplace is evolving and we believe that we can improve our work (with)… input from those in the agricultural community who live with and have to deal with these developments every day.”

That’s how Justice lawyers speak – “important concerns… evolving… that we can improve… ” – when signalling policy shifts. Little wonder corporate counsels from Wilmington to St. Louis to Springdale are sitting up at night guarding their proverbial chicken coops.

This Justice Department, however, not only intends to enforce the Sherman Antitrust Act – a law the Bush administration never knew existed: it brought exactly zero antitrust cases during its tenure – it intends to go to the “agricultural community” to find out who’s doing what to whom.

Even more remarkable than the idea of actually talking to farmers and ranchers to find out what exactly is going on in ag markets is the idea that any of this is new. It’s not; this is the way ag markets were policed for more than 100 years.

Justice and the U. S. Department of Agriculture hope to return to that proven path in a series of joint workshops around the country beginning sometime in early 2010. Key areas of inquiry will be monopsony – how few buyers, like mega meat packers or massive grain exporters, affect prices received by farmers and ranchers – and vertical integration.

So, ya gonna help or ya wanna sleep with da fishes?

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