May 19, 2022

Warren, Rounds Introduce Bipartisan Resolution Directing FTC to Investigate Anticompetitive Practices and Violations of Antitrust Laws in Beef-packing Industry

The top-four beef packers increased their market share from 32% to 85% in the past three decades.

This resolution comes as corporations are abusing their pricing power to jack up prices for American consumers to pad their bottom line.


Text of Bill (pdf) | One Pager (pdf)


Washington, D.C. – Today, United States Senators Elizabeth Warren (D-Mass.) and Senator Mike Rounds (R-S.D.) introduced a bipartisan joint resolution that would direct the Federal Trade Commission (FTC) to report to Congress within one year on the extent of anti-competitive practices and violations of antitrust law in the beef-packing industry, including price-fixing, anti-competitive acquisitions, dominance of supply chains, and monopolization. 


“Only four billionaire corporations control 85% of the market for beef — and these giant corporations have been using their market power to raise prices for consumers and have reduced pay for ranchers, farmers, and plant workers, all while padding their bottom lines. It’s time for Congress to get back in the game and use every tool to promote competition in our markets so we can lower costs for families, and I’m glad to be leading this bipartisan effort with Senator Rounds,” said Senator Warren.


“For the past two years, I have been calling on the Department of Justice to investigate allegations of price-fixing, collusion and other unfair practices in the beef packing industry,” said Senator Rounds. “Unfortunately, the Department of Justice has seemingly not made these concerns a priority and both consumers and cattle producers in South Dakota continue to suffer as a result. For years, the price paid to cattle producers for their high-quality American products has not followed the price of beef at the grocery store. Meanwhile, the four largest beef packers, who control over 80 percent of the beef processing capacity, have enjoyed record profits. This has resulted in nearly 17,000 cattle ranchers going out of business each year since 1980. Senator Warren and I have introduced a bipartisan resolution to address these issues. If passed, it will trigger an existing statute that requires the FTC to investigate and report to Congress whether the big packers are engaging in anti-competitive practices, or even breaking antitrust laws, to maintain their stranglehold on the beef packing industry. It’s critical to determine if violations are occurring, or if Congress needs to take further action to strengthen the current anti-trust laws that are on the books.” 

Our nation’s beef-packing industry appears rife with antitrust violations, and ranchers, farmers, plant workers, and consumers are paying the price as a result. The top-four beef packers increased their market share from 32% to 85% in the past three decades. At the same time, each year since 1980, an average of  nearly 17,000 cattle ranchers have gone out of business. The dominant beef packers are in turn wielding their market power over the ranchers: American ranchers today receive approximately 39 cents of every dollar a consumer spends on beef, compared to the 60 cents they received 50 years ago, and between 2015 and 2018 the spread between the cost of wholesale beef and the price paid to ranchers increased by 60%, while the top beef packers enjoyed record profits. Additionally, beef-packing companies have paid millions of dollars to settle beef price-fixing claims in recent years. 

The Federal Trade Commission Act of 1914 (FTC Act) authorizes either the President or Congress to direct the FTC to investigate and report the facts relating to any alleged violations of antitrust law. In November 2021, President Biden used his authority under this law to call for an oil-and-gas investigation. However, Congress has not used its power under the FTC Act to call for an investigation since the Great  Depression era. In the 1920s, Congress directed the FTC to investigate specific companies like American Tobacco, as well as entire markets such as the flour industry. 

This bipartisan joint resolution would direct the FTC to report to Congress within one year on: 

  •  the extent of anticompetitive practices and violations of antitrust law  in the beef-packing industry, including price fixing, anticompetitive  acquisitions, dominance of supply chains, and monopolization; 
  • the monetary and other harms of anticompetitive practices and violations of antitrust law in the beef-packing industry on consumers,  ranchers, farmers, plant workers, and small businesses; and 
  • recommendations for legislation or other remedial actions.


"With only four beef companies controlling 85% of the market, farmers and ranchers are being paid less, consumers are facing skyrocketing prices at the grocery store, and meat processing workers have been forced to work in unsafe conditions during a pandemic, all while these beef companies have made record profits," said Sarah Carden, Policy Advocate for Farm Action Fund. "We applaud Senators Warren and Rounds for tapping into Congress's power to call on the FTC to investigate the antitrust abuses within the cattle market. It has been nearly 100 years since Congress has used this power, but now is the time for Congress to take the gloves off and go after these abusive corporations."


“The entrenched consolidation of the meatpacking industry has resulted in sky-high prices for consumers while CEOs and shareholders rake in record profits,” said Lindsay Owens, executive director of Groundwork Collaborative. “This Senate resolution is a critical step towards curbing the deeply harmful anticompetitive practices squeezing consumers and ranchers across the country.”

 

The bipartisan resolution is endorsed by Groundwork Collaborative and Farm Action Fund. 

 

As a champion for American consumers and a secure and healthy economy, Senator Warren has engaged in oversight over corporations for their role in increasing prices for consumers as Americans face economy-wide inflation. She has also been calling for more competition and stronger enforcement of antitrust laws to bring down prices for families, raise wages for workers, and protect small businesses: 


  • Last week, Senators Warren and Tammy Baldwin (D-Wisc.), and Rep. Jan Schakowsky (D-Ill.) introduced the Price Gouging Prevention Act of 2022, which would prohibit the practice of price gouging during all abnormal market disruptions – including the current pandemic – by authorizing the FTC and state attorneys general to enforce a federal ban against unconscionably excessive price increases, regardless of a seller's position in a supply chain. 
  • On March 16, 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and FTC the teeth to reject deals in the first instance without court orders and to break up harmful mergers. 
  • On March 2, 2022, Senator Warren and her colleagues called out drug manufacturers for squeezing American families with rapid and widespread price hikes on prescription drugs. 
  • In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits. 
  • That same month, Senator Warren requested the Department of Justice to take aggressive action against corporations violating antitrust laws to hike prices for consumers. 
  •  In January 13, 2022, Senator Warren questioned Federal Reserve nominee Lael Brainard about market concentration and price gouging driving inflation.
  • At a hearing in January 2022, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
  •  In December 2021, Senator Warren slammed Hertz's $2 billion dollar buyback plan, which would line the pockets of company executives and the private equity firm Apollo Global Management, while they raised rental car costs for consumers. 
  • In November 2021, Senator Warren identified 11 energy companies for inflating natural gas prices for consumers while reaping record profits. 
  • That same month, she requested the Department of Justice to investigate the poultry industry's anticompetitive behavior as turkey and chicken prices soar.
  • In the past year, Senator Warren has urged the Biden administration to closely scrutinize potential anticompetitive mergers that could lead to higher prices for consumers and accelerate industry consolidation. She has led letters about the proposed mergers of Frontier and Spirit airlines, Sanderson-Wayne, WarnerMedia-Discovery, and Amazon-MGM.
  • In a New York Times op-ed published on April 8, 2020, Senator Warren urged Congress to focus on cracking down on price gouging in its ongoing effort to address the impact of the coronavirus pandemic. 
  • In March 2020, Senator Warren joined her colleagues in urging the FTC to use its full authority to prevent abusive price gouging on consumer health products during the COVID-19 pandemic. 

 

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