Antitrust Status of Farmer Cooperatives: - USDA Rural Development ...

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dominance during and after the Civil War. Sherman quickly gained the allegiance of the party’s two main constituent groups--midwestern farmers and eastern businessmen--when he rose to Chairman of the Agriculture Committee (38th and 39th Congresses) and the Finance Committee (38th and 40th-44th Congresses). However, he resigned his Senate seat in 1877 to serve as Secretary of the Treasury under President Rutherford B. Hayes, a fellow Republican from Ohio. In 1881, President Hayes was succeeded by Senator-elect James Garfield, yet another Ohio Republican. Sherman left the cabinet and won reelection to the Senate seat vacated by Garfield. During his second period in the Senate, Sherman again served on the Finance Committee, but not Agriculture. While he wasn’t chairman of the Finance Committee, his experience and reputation gave him considerable influence over legislation impacting the country’s financial affairs. LEGISLATIVE HISTORY In the late 1880s, Sherman became convinced of the need to place some limits on the growing power of the trusts. He laid the groundwork for the enactment of an antitrust law near the end of the 50th Congress. First, he led the Senate to approve a resolution, which he introduced, directing the Finance Committee to study the need to control or prohibit anticompetitive conduct. 29 Several weeks later, the first bills were introduced attacking trusts and combinations in restraint of trade. Sherman used the directive as leverage to have the bills referred to the Finance Committee rather than either the Judiciary or Commerce Committee. 30 Thus, he was positioned to move quickly to make sure a bill was reported out of the Finance Committee before Congress adjourned. 31 While no action was taken before the end of the 50th Congress, Sherman gained the prestigious distinction of sponsoring antitrust 29 19 Cong. Rec. 6041 (July 10, 1888). 30 19 Cong. Rec. 7512-7513 (August 14, 1888). 31 19 Cong. Rec. 8483-8484 (September 11, 1888). 23
legislation introduced as the first Senate bill (S. 1) of the 51st Congress. 32 Little dispute existed among Federal legislators over the need for action. The first day of Senate debate on S. 1 consisted almost entirely of a lengthy speech by Senator James George, a Southern Democrat from Mississippi. Senator George, a former chief justice of his State’s supreme court and a member of the Judiciary Committee, would become Sherman’s personal nemesis during Senate consideration of his bill. But Senator George included such a strong condemnation of trusts in this opening statement that Senator Sherman quoted it with approval during the subsequent debate: 32 21 Cong. Rec. 96 (D ecember 4, 1889). 33 Senator George’s statement, 21 Cong. Rec. 1768 (F ebruary 27, 1890); Senator Sherman’s quote thereof, 21 Cong. Rec. 2461 (M arch 21, 1890). 24 These trusts and combinations are great wrongs to the people. They have invaded many of the most important branches of business. They operate with a double-edged sword. They increase beyond reason the cost of the necessaries of life and business, and they decrease the cost of the raw material, the farm products of the country. They regulate prices at their will, depress the price of what they buy and increase the price of what they sell. They aggregate to themselves great, enormous wealth by extortion which makes the people poor. Then, making this extorted wealth the means of further extortion from their unfortunate victims, the people of the United States, they pursue unmolested, unrestrained by law, their ceaseless round of speculation under the law, till they are fast producing that condition in our people in which the great mass of them are servitors of those who have aggregated wealth at their command. 33 During consideration of antitrust legislation, little opposition was expressed to its overall intent. There was, however, much discussion over whether the bill should have been referred to the Judiciary or Commerce Committee and, more important, whether Senator Sher-
Page 1 and 2: USDA United States Department of Ag
Page 3 and 4: Preface Antitrust law poses a speci
Page 5 and 6: Page CHAPTER 3. SHERMAN TO CAPPER-V
Page 7 and 8: Page Association Collaboration ....
Page 9 and 10: Page APPENDIX C. FEDERAL ANTITRUST
Page 11 and 12: CHAPTER 1 HISTORICAL PERSPECTIVE 4
Page 13 and 14: Unlike the waterways, these early r
Page 15 and 16: 250,000. 5 The rapid influx of peop
Page 17 and 18: transcontinental service. This new
Page 19 and 20: to 800,000 members. One of the Gran
Page 21 and 22: faire. Corporate interests wanted t
Page 23 and 24: educed such conduct. Railroad conso
Page 25 and 26: long as the price received for each
Page 27 and 28: However, after the Civil War it fou
Page 29 and 30: Then the Alliance rejected the Roch
Page 31: CHAPTER 2. THE SHERMAN ACT As the d
Page 35 and 36: produce evils, but if you take away
Page 37 and 38: signed into law by President Benjam
Page 39 and 40: ! Sec. 4 establishes federal court
Page 41 and 42: approach for determining which rest
Page 43 and 44: it didn't have to examine whether t
Page 45 and 46: fresh meat also violated the Sherma
Page 47 and 48: of this country.. .are presumed to
Page 49 and 50: 40 relevant facts. This is not beca
Page 51 and 52: (1984). 42 lated industries, in an
Page 53 and 54: found price fixing, then they shoul
Page 55 and 56: "...to raise or lower prices whatev
Page 57 and 58: Thus, the importance of the Capper-
Page 59 and 60: Government need not show significan
Page 61 and 62: Group boycotts were formally tabbed
Page 63 and 64: AP. The United States sought an inj
Page 65 and 66: cooperative provides safeguards suf
Page 67 and 68: marketing agreement). The expelled
Page 69 and 70: 156 Reynolds at 21-22. 157 Joseph G
Page 71 and 72: The rapid growth of fluid milk asso
Page 73 and 74: the hands of 25 trustees who in tur
Page 75 and 76: assertions. Association counsel was
Page 77 and 78: In 1891, Illinois enacted a statute
Page 79 and 80: A month later, the Alabama Court of
Page 81 and 82: CONGRESS RESPONDS TO STANDARD OIL A
Page 83 and 84:
language recognizing in Federal law
Page 85 and 86:
As introduced, the provision coveri
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194 Id. Rep. Volstead was, at this
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200 51 Cong. Rec. 9568 (1914). 201
Page 91 and 92:
When the bill reached the Senate, i
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that, unless they ceased dealing wi
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Virginia opinion, the Supreme Court
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CHAPTER 4. THE CAPPER-VOLSTEAD ACT
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90 price of any agricultural produc
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The Court then concluded that proce
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Republican from Kansas, Senator Art
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96 Section 1 defines and limits the
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244 59 Cong. Rec. 7852 (1920). The
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100 the tax in transit, and the con
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! The Federal Trade Commission woul
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261 Id. 262 60 Cong. Rec. 369 (1920
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106 them. There were no storage fac
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The Senate immediately requested a
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110 considers the duties and the or
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280 Id. 281 61 Cong. Rec. 1043 (192
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114 and adopted by the Senate to a
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Senator Kellogg, in his role as flo
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118 statistics and he, through his
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120 commerce. This provision of sec
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122 creameries... .but they are not
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Committee hearings general agreemen
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Debate continued the following day,
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admitted to membership in the assoc
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321 Id. 322 62 Cong. Rec. 2281 (192
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the same basis as to organization o
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unit' s first publication was L. S.
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The House Agriculture Committee Rep
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Two important issues arose during t
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On the last day of Senate hearings,
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Committee (without the reference to
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The only Congressional debate on th
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terms than others in the same marke
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394 The influence of the nonstock a
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contained a provision in effect exp
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strike down the entire law in Conno
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This chapter begins with detailed c
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All of the defendants based their d
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and marketing, in interstate commer
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First, the Court examined the scope
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with non-producers such as processo
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violation. In an unreported opinion
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appellate court turned to the full-
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At the time Capper-Volstead was ena
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Likewise, an absentee owner of a fa
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statutory "members" and do not stri
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Two others elements of this decisio
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exchanges and either pack their own
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National Egg. 476 The third address
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The Government conceded all points
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the scope of agricultural "producer
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jority of failing to interpret Capp
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middlemen from price-fixing liabili
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510 Id., at page 2. 511 United Stat
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Foods, for processing into grape ju
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Most producer associations claiming
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law, and perhaps antitrust law in g
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Any immediate impact on supply was
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530 Id. 531 15 U.S.C. § 15. 532 No
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The judge noted that the law appear
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cooperative to antitrust liability,
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organization can develop when these
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Exchange Lemon, TreeSweet and Silzl
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Sunkist also challenged the trial j
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Exchange Act. 563 Bauer counterclai
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in the committee report, to provide
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The court found support for its dec
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policy, making sure the cooperative
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contractual arrangements with other
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The second clause offers the option
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as "predatory" conduct. This sectio
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Section 1 and 2 claims when the par
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producers of agricultural commoditi
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authorized by the Secretary of Agri
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etween Embassy and Maryland & Virgi
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United States v. King. 634 Case law
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Several private cases alleging pred
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Further, the cooperative launched a
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The case was tried before a jury, w
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move on to another store still doin
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went into the facts of the case in
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absolute. 667 The last major issues
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672 119 F. Supp. at 907. Cited with
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monopoly power. It is the wrongful
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In 1960, producer associations in D
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were free to sell to whomever they
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exceeded demand. NFO made essential
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Justice also asserted AMPI engaged
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days notice. The court noted that m
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DI. 701 The practice was suspended
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The cooperatives appealed to the U.
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different premiums in different mar
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cover more than half of DI's reques
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properly was a matter of contract l
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727 GVF Cannery v. California Tomat
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monopolize the fluid milk market in
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741 687 F. 2d at 1183. But in a sub
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3. Mid-Am and AMPI threatened to su
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USDA Enforcement In Section 2, Cong
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separated from USDA' s activities t
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Barriers to entry into the producti
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A Federal district court judge reje
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evidence in the record supported th
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781 1983-2 Trade Cases (C CH) at 68
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the mechanism of a producer associa
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educed. This is not the type of inj
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Columbia River, challenging the con
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to refrain from purchasing such pro
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Sunkist and Reliance violated secti
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cooperative. The Department of the
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cultural producers, have the benefi
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Sewell claimed damages in excess of
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Sewell II. When the court decided t
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308 pricing its product at or just
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According to the decision, Agmax co
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issues such as "what is a producer?
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The opinions supporting the dismiss
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for failure to state a claim under
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its marketing agreements. Plaintiff
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CHAPTER 8: IN CONCLUSION, A LOOK TO
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commercializing innovations on at l
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The agreement enjoins DFA and Kelle
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Appendix A. Cooperative Antitrust C
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328 Pages Castorland M ilk & Cheese
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330 Pages Isaly Dairy Company v. Un
Page 341 and 342:
332 Pages North Texas Producers Ass
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334 Pages Whitney v. National Grape
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336 SECON D CIRC UIT Pages Agritron
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338 Pages National Broiler Marketin
Page 349 and 350:
340 EIGHT H CIRC UIT Pages Alexande
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342 Pages Northern California Super
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Appendix C. Federal Antitrust Statu
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should not be entered by the Commis
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348 CLAYTON ACT 38 Stat. 730 (1914)
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(2) The court shall award the State
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352 CAPPER-VOLSTEAD ACT 42 Stat. 38
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injunction or other appropriate rem
Page 365 and 366:
(2) To conduct studies of the econo
Page 367 and 368:
358 FISHERMEN'S COLLECTIVE MARKETIN
Page 369 and 370:
to be had in considering such order
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