November 15, 2022

Warren, Booker Ask U.S. Agriculture Department About USDA Chief Economist’s Testimony Against U.S. Justice Department on Behalf of Sugar Industry in Antitrust Case

USDA Official Testified in “Private Capacity,” Undermined DOJ, Biden Executive Order on Competition

“This activity raises numerous ethics concerns and is particularly troubling at a time when major grocery chains have already been leveraging their market power to raise prices and increase their own profits at the expense of American families...

This contradicts President Biden’s recent executive order on competition and calls into question whether USDA’s employees are working to serve the American people or wealthy corporate interests."

Text of Letter (PDF)

Washington D.C. - U.S. Senators Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) sent a letter to United States Department of Agriculture (USDA) Secretary Thomas J. Vilsack inquiring about the role of the USDA and a senior USDA employee in an antitrust lawsuit brought by the Department of Justice (DOJ) to stop United States Sugar Corporation (U.S. Sugar) from acquiring Imperial Sugar Company (Imperial). In the letter, the lawmakers express serious concerns about USDA’s chief economist testifying as an expert on behalf of the sugar industry, which may have persuaded a judge to greenlight a corporate merger that is likely to increase sugar prices. The lawmakers point out how this testimony raises numerous ethics concerns, undermined the DOJ,  and contradicted President Biden’s executive order on competition. 

On July 9, 2021, President Biden released his Executive Order on Promoting Competition in the American Economy, a powerful set of directives and recommendations designed to reinvigorate antitrust enforcement in the United States and coordinate his administration’s efforts to create fairer markets. Last November, the DOJ filed a lawsuit to enjoin U.S. Sugar’s proposed acquisition of Imperial on the grounds that the purchase would violate the Clayton Act. The DOJ alleged that the deal “would leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers” and that “American businesses and consumers would pay more for refined sugar.” 

“But even as one part of the Biden administration fought to enforce the nation’s antitrust laws and prevent a sugar duopoly from attaining nearly 75% of a regional market, another part of the administration appeared to undermine antitrust enforcement. Dr. Barbara Fecso, USDA’s chief economist, served as a key witness in her ‘personal capacity’ during this sugar merger trial, even though USDA officially took no position as to whether the deal would produce any anticompetitive effects,” wrote the lawmakers. 

During her testimony, Dr. Fecso indicated that she was appearing in her personal capacity and not on behalf of USDA. Dr. Fecso nevertheless testified against DOJ, alleging that U.S. Sugar’s “acquisition of Imperial Sugar would ultimately benefit consumers.” This opinion was apparently not based on any actual evidence; “when asked if she had seen any data that supported her belief that the merger wouldn’t lead to higher sugar prices,” Dr. Fecso admitted that she had not. At least a part of Dr. Fecso’s conclusion rested on her longstanding relationships with corporate executives at U.S. Sugar and Imperial, “who had assured her they had no plans to raise prices”: “‘Knowing these people as long as I have,’ she said, according to a transcript of her testimony, ‘I had high faith that (the deal) was good.’”

Judge Maryellen Noreika ruled against the DOJ on September 23, 2022, and her memorandum opinion made clear that she “found Dr. Fecso to be an exceptionally knowledgeable and particularly credible witness.” The judge noted that “(t)here is no one at USDA with a longer tenure working on the Federal Sugar Program” than Dr. Fecso, and she went on to remark that “Dr. Fecso testified credibly that she anticipates the Proposed Transaction is not likely to lead to higher prices but, in fact, may lower prices for U.S. purchasers and consumers of refined sugar by creating certain efficiencies and cost savings.”

The lawmakers note how this testimony by a USDA employee against the DOJ represented a grave conflict of interest and raised a number of ethics questions including whether Dr. Fecso’s claims that she acted in her personal capacity are at all meaningful and whether she can continue in her role at USDA without recusing herself from any and all USDA activities related to the sugar industry.

As a champion for consumers and fair markets Senator Warren has continuously urged regulators to combat market concentration, monopolies, and anticompetitive practices across sectors in  the economy:

  • Following the court ruling in favor of the U.S. Sugar purchase of Imperial, Senator Warren called the ruling a bizarre outcome that would hand two giants 75% of the refined sugar market in the southeast. She also reiterated calls for the DOJ to continue taking on anticompetitive mergers that would drive up the price of food.
  • On November 2, 2022, Senator Warren sent letters to the FTC Chair Lina Khan and Assistant Attorney General of the Antitrust Division at the DOJ Jonathan Kanter, calling for increased oversight of Big Tech expansion into the automotive industry, raising concerns about competition and urging the agencies to take swift action.
  • On October 26, 2022, Senators Warren, Bernie Sanders (I-Vt.) and Representative Jan Schakowsky (D-Ill.) sent a letter to FTC Chair Lina Khan urging the agency to oppose Kroger’s proposed $24.6 billion acquisition of Albertsons, which could increase the companies’ monopoly power and hurt both companies’ workers and consumers. The lawmakers also raised concerns about an unusual $4 billion dividend payout by Albertsons that is part of the deal.
  • On September 2022, Senator Warren, along with Representatives Mondaire Jones (D-N.Y.), Katie Porter (D-Calif.), Mark Pocan (D-Wisc.), Pramila Jayapal (D-Wash.), and Jesús “Chuy” García (D-Ill.), sent a letter to the FTC calling on the agency to oppose Amazon’s proposed $1.65 billion acquisition of iRobot, raising concerns about Amazon’s anticompetitive practices that put consumers and their privacy at risk
  • In September 2022, Senator Warren sent a letter to Secretary of Transportation Pete Buttigieg, urging the Department of Transportation to use its full statutory authority to address consolidation in the airline industry and expressing serious concerns about the proposed merger between JetBlue and Spirit Airlines.
  • In June 2022, as the country faced an infant formula crisis, Senators Warren, Cory Booker (D-N.J.), and Bernie Sanders (I-Vt.) and U.S. Representative Katie Porter sent a letter to Jonathan Kanter expressing skepticism regarding a bid from a private equity firm to acquire the Enfamil infant formula manufacturing arm of Reckitt Benckiser Group and how such a transaction, amid the nation’s ongoing infant formula shortage, could harm competition or prolong this crisis. 
  • In May 2022, Senators Warren and Mike Rounds (R-S.D.) introduced a bipartisan joint resolution that would direct the 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.
  • 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 DOJ and FTC the teeth to reject deals in the first instance without court orders and to break up harmful mergers. 
  • In March 2022, Senator Warren and Representative Jones, along with Senators Ben Ray Luján (D-N.M.) and Bernie Sanders , and Representatives Rashida Tlaib (D-Mich.), Katie Porter, Jan Schakowsky, and Alexandria Ocasio-Cortez (D-N.Y.) sent a letter to Jonathan Kanter and Transportation Secretary Pete Buttigieg, expressing concerns about Frontier Airlines’s proposed acquisition of Spirit Airlines. 
  • In February 2022, Senator Warren and Representative Jones led their colleagues to slam the proposed merger between Sanderson Farms, the third-largest poultry processor, and Wayne Farms, the sixth-largest poultry processor, and called on the DOJ to thoroughly review the deal and step in to prevent harm to American farmers and consumers. 
  • In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits. 
  • In February 2022, Senator Warren requested the DOJ to take aggressive action against corporations violating antitrust laws to hike prices for consumers.
  • In January 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 and Representatives Joaquin Castro (D-Texas), David Cicilline (D-R.I.), Pramila Jayapal and 29 other Members of Congress sent a letter to the DOJ, calling on it to investigate the proposed $43 billion merger of Discovery and WarnerMedia for violations of antitrust laws.
  • In November 2021, Senator Warren requested the Department of Justice to investigate the poultry industry's anticompetitive behavior as turkey and chicken prices soared.
  • In June 2021, Senator Warren called on the FTC to engage in a “broad” and “meticulous” review of Amazon's acquisition of Metro-Goldwyn-Mayer Studios (MGM) consistent with Section 7 of the Clayton Act, expressing concerns that the acquisition has the potential to harm consumers and workers, and reduce innovation.

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