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Posted inAgriculture
Commentary: After Years of Inaction, Could a White House Order Signal Change on Antitrust Enforcement?
The Biden administration says it wants to take on deceitful and anti-competitive practices that harm farmers. The changes are a step in the right direction.
by Will Gallagher September 15, 2021 September 14, 2021
President Joe Biden hands out a pen after signing an executive order aimed at promoting competition in the economy, in the State Dining Room of the White House, Friday, July 9, 2021, in Washington. Standing from left, Transportation Secretary Pete Buttigieg, Lina Khan, Chair of the Federal Trade Commission, Health and Human Services Secretary Xavier Becerra, Commerce Secretary Gina Raimondo, Attorney General Merrick Garland, National Economic Council director Brian Deese, obscured, and Jessica Rosenworcel, Acting Chairwoman of the Federal Communications Commission. (AP Photo/Evan Vucci)
The White House on July 9 issued an ambitious Executive Order tackling consolidation in agriculture and several other key industries. The order reasserts the government's authority to challenge deceitful and harmful corporate practices in an era of extreme monopolization in agricultural markets, including seed, farm equipment, and livestock. Consolidation reduces choices and drives up prices for seeds and other farm inputs, allowing the handful of top industry players to push products and polices that perpetuate an unsustainable system with little to no concern for public or environmental health.
Antitrust is governed by a patchwork of hundred-year old laws: mainly the federal Sherman, FTC, and Clayton Acts. The Sherman Act outlaws any "contract" or "conspiracy" that unreasonably restrains trade, the Clayton Act prohibits monopolistic mergers and acquisitions, and the FTC Act established the Federal Trade Commission as the major antitrust watchdog alongside the Department of Justice (DOJ). Consolidation in agricultural markets was such a potent driving force behind these laws that Congress devised especially strict restrictions to combat anti-competitive behavior in the livestock industry. This law, known as the 1921 Packers and Stockyards Act (PSA), has been minimally effective, despite the USDA and DOJ jointly holding five public workshops on competition in 2010, one of which was focused on strategizing avenues for stronger enforcement.
After decades of delay and a legislative rider defunding all efforts to move forward with rulemaking, USDA announced in June that it would finally breathe new life into the Packers and Stockyards Act. The proposed rules will more clearly define the contours of illegal behavior, do away with the "tournament" pricing structure—where poultry growers are pitted against their peers and paid based on a ranking system—and allow plaintiffs to bring lawsuits without needing to demonstrate industry-wide harm. USDA Secretary Tom Vilsack praised the initiative, arguing that the agency's interpretation of antitrust law "needs to take into account modern market dynamics" rather than continue "to be used as a safe harbor for bad actors."
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While certainly a step in the right direction, the enhanced antitrust protections envisioned by the Packers and Stockyards Act should be extended to all agricultural sectors, not just livestock. The problems inherent in livestock farming abound in crop farming as well, in both cases largely due to unequal ownership of resources and exploitative contracts that squeeze out most of the profits and pin nearly all of the liabilities on the farmer. Farmers who grow patented seed—over 90% in the U.S.—must do so in a highly controlled manner or risk breaching the contract with their seed supplier. These agreements bar any and all research, replanting, and other off-label uses of seed, including breeding projects to develop new and regionally adapted varieties. The vast majority of patented varieties developed by the big corporations only contain genetic modifications that grant them resistance to an herbicide or pesticide that is also sold by the same company, trapping farmers in a revolving door of dependence on a single supplier for many, if not all, of their inputs. To make matters worse, these farmers are routinely investigated for patent infringement – for saving these proprietary varieties. Farmers' time-honored right to save a portion of their harvest for re-planting is now illegal due to corporate patent rights and the egregious contracts protecting them.
Biden's plan acknowledges these dangers and duly targets patents as a driver of consolidation, directing the U.S. Patent and Trademark Office to investigate and prepare a report outlining the anticompetitive effects of seed patents and potential solutions. The body of precedent supporting the practice of granting utility patents on seeds is surprisingly thin: the legislative histories of the Plant Patent Act and Plant Variety Protection Act show that Congress expressly considered—and twice rejected—overly restrictive grants of power over new varieties. Seeds became patentable thanks to a novel interpretation from a narrow majority of justices on the Supreme Court, who in 1980 decided that GMOs were not "products of nature" but rather human inventions.
How can Congress best remedy the problems caused by consolidation in the seed industry? Restoring Plant Variety Protection as the exclusive avenue for protecting new seeds would still promote competition and innovation without the excessively monopolistic results. Increasing funding for public plant breeding would also be a step in the right direction, as these programs tend to focus on crops with high sociocultural, scientific, and nutritional value, rather than commodity crops with a high market value. A promising solution identified in the Executive Order would be to promulgate a model contract, which (if adopted by the industry) would help steer the balance of power back in favor of farmers by striking out some of the most egregious provisions in seed sale contracts.
In addition to investigating intellectual property and revamping the livestock rules, the order also directs USDA to adopt "anti-retaliation" provisions for farmers who assert their rights or speak up against injustices. In too many cases, farmers who call for more zealous oversight have become the subject of investigations, lost contracts with their supplier, or have otherwise been vilified by the industry. Eight states have adopted "farmer protection" laws in an attempt to level the playing field in patent infringement disputes, and in 2019, New York passed a law creating an affirmative defense when the farmer can show that they had no intentional involvement and did not knowingly benefit from GMO contamination events.
Other proposals in the plan would call on the government to strengthen "right-to-repair" protections, allowing farmers to repair their own equipment in a cost-effective manner, and investigate monopolies in the healthcare, finance, and tech industries. Biden's Executive Order should be lauded for its extensive scope and acknowledgment of serious issues that previous administrations have swept under the rug; however, corporations will certainly not change their ways without a fight. The time has never been riper for standing up for what we believe in—safe food, healthy consumers, and autonomy for farmers—and recognizing that ethical corporate practices lie at the heart of these goals.
Will Gallagher is a third-year law student at the University of Maryland interested in the intersection of agricultural law and intellectual property. Will currently serves on the executive board of the Maryland Law Review, UMD Food Law Society, and UMD Chapter of the National Lawyers Guild. He wrote this piece as part of Organic Seed Alliance's Seed Patent Watch project. Learn more at.
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