USDA seeks to clarify ‘unfair’ practices through proposed competition rule

The Agriculture Department on Tuesday proposed new definitions for practices that may be considered “unfair” under the Packers and Stockyards Act, allowing the Livestock Antitrust Act to prohibit the behaviors which “harm market participants” and “harm the market”.

The determination of what constitutes an unfair practice was determined by the agency’s judicial official, and courts have “inconsistently applied” those rulings, according to the proposed new rule.

The proposed rule, signed by Agricultural Marketing Service Deputy Assistant Administrator Erin Morris, said it would present a “clear interpretation and promote consistency and predictability in its application of the law.”

Under the proposal, practices would be considered unfair if they would cause or are likely to cause “significant harm to one or more market participants” that those participants “cannot reasonably avoid” and those who supervise these practices “cannot reasonably avoid.” justify by establishing countervailing advantages for the participant(s) in the market or in market competition which outweigh the material harm or the likelihood of material harm.”

The proposal is USDA’s second attempt to address these definitions. Under the Obama era, the agency proposed a broader rule that would have prohibited “any unfair, unfairly discriminatory or deceptive practice,” and said that in some cases those violations could be proven “without proof of predatory intent, competitive harm, or risk of injury. This rule was never finalized due to a series of annual appropriations provisions that interrupted the agency’s work on this issue.

Agriculture Secretary Tom Vilsack acknowledged Tuesday at an event hosted by the Center for American Progress that developing the rule was not easy.

“With what we have proposed today, we clearly delineate the possibility that injustice is framed in terms of individual harm,” Vilsack said, noting that now individual producers might be able “to establish, by virtue of elements of the new rule, that the harm was specific to their activity and constituted a violation of the Packers and Stockyards rules.

The Meat Institute, which represents meat processors, said in a press release that the rule was intended to “to circumvent Congress and the courts to overturn the long-standing legal standard that parties must demonstrate harm to competition to sue and win” under the Packers and Stockyards Act. The report notes that livestock prices have reached record levels since 2023.

“Unfortunately for the Biden administration, Secretary Vilsack has already tried these changes,” said Julie Anna Potts, the group’s president and CEO. “They have failed in court, are at odds with Congressional intent, and are a blatant attempt to pick winners and losers in the marketplace.” With these proposed rules, everyone loses, the breeder, the packer, and ultimately the consumer.