Competition, Concentration and Agriculture

Statement to the Senate Committee on Agriculture, Nutrition, and Forestry

Agriculture Concentration and Competition Hearing

April 27, 2000

Professor Peter C. Carstensen

Young-Bascom Professor of Law

University of Wisconsin

For more than 25 years I have been a teacher and scholar of economic regulation and competition policy. In particular, my work has focused on the theory, policy and actual enforcement of our antitrust law. Prior to going to teach at the University of Wisconsin, I was a staff attorney at the United States Department of Justice Antitrust Division. There I was assigned to the Evaluation Section where my projects included a wide range of competition policy issues. I hold both an LLB degree and a Masters in Economics from Yale University and have consistently sought to relate economic analysis to the public policy problems that arise in the effort to foster and retain competitive markets. I am also a generalist with respect to the areas of economic activity that I examine.

Over the years, however, I have had a number of opportunities to examine specific agriculturally related topics. For example, as a government lawyer I conducted an examination of the old meat packers consent decree from1920 and recommended modernization of its terms to take account of the fact that the industry had, by the late 1960s, become much more competitive. Regrettably, it took some years before those recommendations were ultimately implemented and then the government gave up too much control over the structure of the industry. In 1992, I published a detailed study based on primary sources of the famous Chicago Board of Trade case (Board of Trade of the City of Chicago v. United States, 246 US 231 (1918)) which concerned price fixing restraints in grain trading and remains the primary doctrinal statement of the rule of reason in antitrust law.⁽¹⁾

A little over a year ago I became more actively engaged in the problems of competition in agriculture as a result of inquiries about competition policy issues from both congressional staff members and farm organizations. Since then, I have had the opportunity to participate in meetings and conferences that address various aspects of agriculture. I am still not an expert in the details of the operation of agriculture and its economics, but what I am learning is that the fundamental issues concerning competition and concentration in agriculture are similar to issues in any other area of business activity.

The Sherman and Clayton Acts were adopted because Congress was concerned with the social and political as well as the economic implications of high concentration, monopoly, conspiracy, and massive mergers. In proposing the act that bears his name, Senator Sherman (R., Ohio) warned the Senate that: "The popular mind is agitated with problems that may disturb social order, among them all none is more threatening than the inequality of condition . . . and opportunity that has grown . . . out of the concentration of capital into vast combinations to control production and trade and to break down competition." Later in the same great speech, he observed: "If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade, with power to prevent competition and to fix the price of any commodity."⁽²⁾ These declarations demonstrate that core political values were central to the concerns that motivated the adoption of antitrust law.

In the first substantive decision interpreting the Sherman Act, Justice Peckham, no liberal or protectionist, wrote that the dynamics of markets can bring unavoidable hardships to particular classes of business. Such transformations are inevitable and must be endured. However, he condemned "combinations of capital whose purpose . . . is to control . . . production or manufacture . . . and . . . dictate price. . . ." In addition to the harm to consumers, he identified the harmful effect of "driv[ing] out of business . . .independent dealers . . ." He concluded: "[I]t is not for the real prosperity of any country that such changes should occur which result in transferring an independent business man . . . into a mere servant or agent of a corporation. . . ; having no voice in shaping the business policy . . . and bound to obey orders issued by others."⁽³⁾

Other seminal decisions of the courts have carried forward this theme. For example, Judge Learned Hand in the Alcoa case declared: "[I]t is possible, because of its indirect social or moral effect, to prefer a system of small producers . . . to one in which the great mass of those engaged must accept the direction of a few."⁽⁴⁾ Similarly, Justice Marshall in Topco declared that: "Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of Free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms."⁽⁵⁾

I want to renew these warnings in the context of what is happening to agricultural markets today. Past failure to enforce antitrust law has resulted in increased concentration in both the markets supplying agriculture and in those that process and distribute its products. Moreover, subsequent, large scale vertical integration through both ownership and contract has impaired the working of transactional markets in agricultural goods. More and more, we see a handful of firms dominating a larger number of markets on both sides of the farmer and rancher. Further, those firms in turn are entering into "strategic alliances" with each other to make more secure their joint control over and allocation of markets. These changes encourage, indeed, may make inevitable, conduct that further weakens not only the viability of existing agricultural producers but also has a strongly negative impact on the dynamics of our economy as a whole. Fearing the strategic behavior of its rivals, each agricultural behemoth responds with actions that it believes will protect its position even though this imposes costs on producers and consumers. These 800 pound gorillas trash the agricultural economy to protect and entrench their present and future position in the market. The farmer and rancher increasingly has "no voice in shaping the business policy" but is simply "bound to obey orders issued by others." Once independent farmers and ranchers are becoming the serfs of the 21^st century.

Even if one were to ignore the social and political reasons for favoring a dispersed and open form of economic organization for our society, powerful economic considerations support the same policy goal. The fundamental reason for our economic success in this country is not short run efficiency in production, but the continued capacity to innovate new products, services, methods of production, and systems of distribution. It is essential to our long-run economic growth that we retain the kind of open economy in which such dynamic growth can occur. Such essential innovation and adaption can and will occur with greater speed and more general social gain when markets are unconcentrated. Competition is a great force leading to innovation as well as adoption of more efficient and desirable methods of production and distribution. Moreover, in open and competitive markets, the incentives to engage in strategic behaviors whether to exclude rivals or exploit unreasonably customers or suppliers are greatly limited because of the capacity of others to enter and compete.

Thus, competition policy should not make short run economic efficiency a central criterion. Experience teaches that there are many ways to achieve such efficiency. Hence, policy makers and competition law enforcers should seek those ways of organizing economic activity and market relationships in order to maximize the potential to achieve other essential goals of public policy. For social and political reasons as well as a long interest in the maintaining the dynamics of the economy, large concentrations of control over specific markets or market sectors are undesirable. Moreover, it is very rare in an economy as vast as ours that high concentration is necessary to achieve desirable efficiency.

I am not suggesting that we should ignore the questions of economic efficiency and minimizing the costs of production. Those are always threshold considerations. They provide a powerful argument against many of the protectionist pieces of legislation proposed in state and national legislatures. My claim supported by many decades of experience is that the market process can find ways to achieve real efficiency without having to sacrifice other important goals.

One of our most important goals for reasons of economic dynamics and social and political values is to retain and enhance a truly competitive market structure. There are those, some of whom may be present here today, who, in the spirit of Karl Marx, will tell you that there is only one way to organize an economy and that is to centralize it and have one or at most a handful of enterprises. The fall of the Soviet system should have taught everyone that economic determinism and the cult of giantism are invalid. As Mao said in a different context there are "many roads" whether to socialism or capitalism. We need to choose the road that is most consistent with our social, political and long run economic needs and aspirations.

The fact that there are many roads to efficiency is liberating for public policy. It means that decision makers need be much less concerned about long run adverse efficiency effects of their decisions. If something is truly efficient, the market will find a way to achieve that outcome. A decade ago I reviewed a number of the claims by scholars about the adverse effect of antitrust actions on the economy.⁽⁶⁾ These cases were largely ones that had emphasized non-efficiency values. The historical record simply did not support the claim that those decisions had caused serious losses or other negative effects. Regrettably, I should also report that it is a little difficult to find strong evidence that antitrust interventions standing alone had had clearly positive effects on efficiency. More often than not, it was the interaction of antitrust, which had retained a more open and accessible market context, with changes in technology and/or other regulation that produced significant improvements.

The data I have seen show that the country faces very high and rapidly increasing levels of concentration in both industries supplying farms and in those buying farm products. In general, high concentration results in higher prices to buyers and lower prices to sellers than would occur in less concentrated contexts. This seems to be the situation facing agriculture.

In addition, high concentration makes it rational and feasible for firms to engage in a variety of strategic actions including longer term contracts for supplies, exclusive dealing, slotting allowances, and other conduct which make sense because of the impact on competitors-actual or potential-rather than on the underlying costs of doing business. These practices often result in lower prices to producers. Some mistakenly believe that such a use of market power will aid the ultimate consumer by lowering prices.

The notion that a monopoly buyer will share its winnings with its customers is wrong. Recently, Frederick Warren-Boulton, who directed economic operations at the Antitrust Division in the Reagan years, reiterated the basic economic analysis that firms with such buying power can exploit that power to the detriment of sellers and that, regardless of the degree of competition in the downstream markets into which such firms sell, they have no incentive to "pass-on" to consumers any of the excess profits derived from exploiting suppliers.⁽⁷⁾ Indeed, if the downstream market is also oligopolistic, such a firm will simultaneously over charge its customers.

Nevertheless, in the 1980s the government failed to police the mergers among meat packers. It mistakenly assumed that downstream markets would somehow police the upstream strategic buying conduct of regionally dominant firms. The antitrust enforcement authorities ignored the lost choices that these combinations imposed on farmers and ranchers. Today, we have highly concentrated markets on both a national and regional basis. As of 1998 four firms slaughtered 81% of all steer and heifers.⁽⁸⁾ This is an increase from 36% of total slaughter in 1980. Similarly, hog slaughter rose from 34% in the top four firms in 1980 to 56% in 1998.⁽⁹⁾ The result is strategic buying behavior which harms farmers and ranchers, denies them a transparent transactional market place for their products, and may now require more direct regulation of buying practices. Recent data show that the spread between the price paid to raisers and the wholesale price of meat has increased substantially. According to USDA data, the farm-to-wholesale price spreads for pork increased by 52% and for beef by 24% in the past five years.⁽¹⁰⁾ This is exactly the result that theory would predict as oligopoly grows in both the buying and selling markets for meat products.

Other markets into which farmers and ranchers sell have also become more concentrated. This is notable in grain processing⁽¹¹⁾ and is an increasing source of concern in dairy products as well. I have seen published reports that one company has acquired control over 70% of all milk sales in New England and has a 20% share of all sales in the United States as a result of an aggressive merger program.

Further undermining the vitality of the market system was the tolerance of mergers among grocery retailers which allowed greater and greater concentration of buying power in the hands of large enterprises. This created a symbiotic vertical relationship between retail oligopoly and the slaughter house oligopoly. The result is the increasing spread between the price paid the farmer the price charged the housewife.

Over the last two decades there has also been a marked increase in the concentration of the various industries serving agriculture-from farm equipment to seeds and herbicides or pesticides.⁽¹²⁾ Among leading foreign and domestic seed companies alone, there have been 68 acquisitions between 1995 and 1998.⁽¹³⁾

The late Leonard Weiss in 1989 collected all the studies he could find concerning the comparative impact of concentration on price.⁽¹⁴⁾ The overwhelmingly consistent outcome was that prices were higher in concentrated markets even though profits were not consistently higher. The implication of these results is that concentrated markets impose costs on consumers and suppliers who must sell into such markets, but such markets are not more efficient. The oligopolists waste enormous resources in striving to retain, protect and entrench their market positions.⁽¹⁵⁾ Thus, there is no social gain. There is only social cost.

The beef packing industry illustrates how unnecessary high concentration is to efficient plant scale. As of 1997, the four largest firms control 78% of the slaughter. But there were 22 plants with the highest level of production accounting for 80% of all production. Assuming that such plants reflected the greatest scale economies in operations, achieving such scale economies would require less than 3.7% of the market. In pork, the 31 largest plants yield 88% of production which means each plant requires less than 3% of the market.⁽¹⁶⁾ Thus a highly dispersed ownership and unconcentrated market would be entirely consistent with the largest size of plants in both pork and beef packing.

In framing and enforcing a policy to retain and enhance individual autonomy and freedom of action, it is also important to recognize the broader implications of context. If large firms dominate a market sector, then it is irresponsible to look only at the specific points of substantial competitive interaction without considering how to maintain effective overall competition in that sector.

Illustrative of this error is the pending settlement of the Cargil-Continental Grain merger.⁽¹⁷⁾ This merger combines two of a handful of global grain trading firms. The government insisted only on isolated divestitures where it identified specific quantitatively substantial overlaps between the merging firms. In many instances including key export facilities, not surprisingly, the prospective buyer of those assets is another of the few major global grain traders. Thus, global market leaders are cannibalizing a third firm. The Antitrust Division in its justification for the settlement recognized the pervasive competition between Cargil and Continental, but its proposed relief ignored the overall operation of grain trading in which large integrated firms have come to dominate. By allowing the dismemberment of one of the leaders, the government has effectively reduced the number of real competitors in a significant way. This is a failure to consider the overall context because of blinders of a theory of competitive effect that ignores the larger and longer run implications of these combinations. This settlement will increase the risk of monopsonistic buying practices of the sort that Mr. Warren-Boulton described.

At the same time, there is no reason to believe that any increased efficiency will result from this merger. The Antitrust Division position is only that it did not see a significant present danger to narrowly defined competitive concerns arising from the combination less its divestitures. This is a bad decision because it reinforces the aggregate concentration of the market and thus entrenches the kind of oligopoly that will have resources to protect itself against equally efficient, socially more desirable alternatives. Moreover, by reducing in the long run the choices available to sellers, it will further limit the potential for autonomy and choice.

Review of the identify of buyers of agricultural products or sellers to agriculture producers shows that the same companies appear again and again. Thus DuPont provides insecticides and herbicides as well as providing Pioneer Hybrids.⁽¹⁸⁾ Monsanto is also a leading producer of seeds and crop protections. On the other side, Cargil, ADM, or ConAgra appear again and again among the leading firms in various kinds of food processing and distribution.⁽¹⁹⁾ Several implications follow from this kind of sector dominance as well as cross linkages among supply and processing markets. The first is that such firms have the potential to deal in multiple ways with their customers. Monsanto has employed contracts to limit the use of herbicides on the soy beans it sells to its particular brand. Thus, such a firm has an incentive to distort and restrict competition in order to further its owns economic interest.

A second important implication is that the potential exists for linked oligopoly. Firms recognize each others' "sphere of influence" and refuse to enter or compete vigorously in each others' dominant area. This has proven to be a noticeable consequence of interstate bank mergers.⁽²⁰⁾ It seems increasingly likely in the area of agriculture.

Third, limiting the number of firms in any sector reduces the incentive to engage in dramatic innovations in technology or marketing. The firms have a shared interest in stability within their sector. They can define and limit the scope of their competition with less risk that someone will come up with a new way to do things. This kind of concentration therefore chokes off the scope of innovation and competition among potential alternatives.

Increasingly producers have integrated backward into the production of agricultural commodities. The pending merger between Smithfield and Murphy Farms that will consolidate the largest pork processor with the dominant pig raiser illustrates the kind of combinations that are occurring across a large number of fields. Such integration will not produce efficiency gains. It will raise barriers to entry into both processing and raising hogs. As such integration increases, the transactional market will be marginalized. Independents will face greater obstacles in marketing their hogs and lower prices. The spot market will become the place in which the packer seeks only the extra supplies when there is unexpected demand. This is likely to result in a higher cost on average for the processor, but the gain will be in controlling more fully the market context-less risk of new entry, less risk of direct competition for supplies and thus more apparent predictability for the market process. On the retail end, the large chain buyer is as interested in being assured that its price is as favorable as its competitors price. Thus, the inefficiency of the system can be passed on to the final consumer.

The combination of these structural changes in turn make possible new kinds of conduct that are rational self-protection by such firms. These actions achieve both protection and entrenchment of their positions in the market. They produce no gains for consumers or farmers and ranchers. Indeed, this conduct is likely to harm the long run best interests of both classes. Several types of conduct problems seem evident:

Strategic alliances: Non-merger collaborations among large firms allow them to coordinate their competition in order to create mutual power. The intended effect is to obtain a stronger market position. A few of these alliances might provide economically useful coordination if they create an efficiency enhancing joint venture to produce or distribute new products. Such joint ventures also show that merger is not an essential element to effective entry into new lines of business. Other alliances, to the extent that we have any reliable information, are merely a mechanism to coordinate efforts among firms to limit their direct competition and ensure mutual strategies to build market power.

It should be a source of real concern that we know so little about the scope and content of these alliances. The parties, except as required by law, do not make public disclosure of their agreements or how they are implementing them. Given the high levels of concentration both within markets and industry sectors as well as the growing vertical integration in these industries, such disclosure is essential to proper evaluation of these relationships.

Vertical contracts: The growth of contracts between processors and producers in a variety of agricultural commodities has produced an additional set of harms. These contracts have arguable utility by providing the producer with greater assurance of sale at a known price and by assuring the buyer that particular products will be available when desired. However, these contracts often have substantial non-efficiency motivation as I have discussed. In particular, if a producer can tie up a substantial segment of the existing supply under contract, it will be much more difficult for a new entrant to open up in the area because of the limited supply available. If a substantial segment of supply is controlled, it will destroy a workable transactional market; thus forcing the remaining producers to scramble to seek similar contracts. In the end, such rivalry can destroy the more efficient and flexible means of linking producers to processors. The choices are not efficiency driven but the consequence of the rivalry that occurs in concentrated markets. One of the most difficult problems facing commercial agriculture today is that of gathering and interpreting pricing and other contract information.

Contracting is not inherently evil, but it can be used for a variety of strategic purposes if it does not take place in a well structured legal environment in which there is reasonable equality of bargaining power, limited incentive to engage in strategic behavior, and continuing transparency with respect to transactions. None of these elements are currently present in most agricultural dealings. I would note, however, that in Wisconsin, the state department of agriculture has adopted administrative rules governing the contracting for vegetables for processing. Those rules were the result of a series of sessions involving producers and processors as well as some individuals like myself. The result is a set of rules that govern the contracting process in ways that increase the fairness and equity of the resulting contracts for both parties.

Slotting and other special deals at retail: Recent congressional hearings have focused on the emergence of slotting payments as yet another device that creates problems throughout the agricultural marketing system. Large food processors pay large retail chains for the privilege of having their products displayed favorably. Such transactions occur because there are large producers with multiple lines of goods dealing with very large retail chains. Buying a favorable location in a single store for a single product of small firm does not produce either foreclosure or likely gain. In such a situation, the store owner will decide based on his or her own judgment what to place on the shelf and the producer will compete on price and quality. When a large producer can deal with a handful of chains so that it gets a favored position, this enriches the chain and protects the large producer from the threat of competition that arises from consumer choice. Again, this problem exists because of the concentrated markets in retailing and production.

Abuse of intellectual property rights: Increasingly, suppliers of seeds and other inputs to agriculture are trying to control the production and resale of the resulting crops and animals along with specifying the methods and products to be used in connection with raising these items. Here the problem is an expansive definition of the legal rights that patents and other intellectual property confer on their "owners." When a soy bean developer wants to control the herbicide or pesticide used with the beans its customer plants, we see the kind of distortion that such rights create. We have new technology in plants and animals protected by legal systems developed in another time to define rights in different contexts. These rights confer vast opportunities to exploit the user. This is true across the board in areas of high technology. By licensing rather than selling the idea, the owner can exercise comprehensive control over the scope and nature of the use made. In the concentrated markets of agriculture with the broad range of activities controlled by a single firm, these rights encourage a expansive and abusive exploitation of the user. Indeed, once one firm starts down this path, its rivals are forced to follow because otherwise, they risk losing out in the race to survive. Thus, badly defined rights and concentrated markets induce the maximum in exploitation.

In sum, the present structure and conduct of the markets supplying agriculture and buying its products impose substantial but avoidable costs on farmers and ranchers as well as consumers. Moreover, the gain in terms of innovation or efficiency are not uniquely associated with the present system. Indeed, it seems likely that the country would gain on both counts from a different system that reduced concentration and opened up alternative routes. Finally, the cost of this transformation is not only economic. It makes the farmer or rancher, in the words of Justice Peckham, "into a mere servant or agent of a corporation."

I should note that some marginal progress is occurring. The FTC has recently blocked Ahold's acquisition of Pathmark thus retaining some better competition in the grocery business. The FTC also insisted that the divestiture of gas stations by Exxon and Mobil in the northeast go to a single buyer so that the resulting entity would have a greater potential to be an effective competitive force. The Antitrust Division blocked Monsanto's effort to acquire dominance in the cotton seed business. In the Continental Grain merger, it did at least acknowledge that adverse effects on suppliers are legitimate antitrust concerns in addition to adverse effect on consumers. Moreover, the Division has in some high technology and telecommunications mergers recognized that both vertical and conglomerate dimensions of the transactions raised competitive concerns and required remedy. Much more would need to be done before the current enforcement of antitrust law could be regarded as a primary means to protect the existing structure of American agriculture from unnecessary disruption and potential destruction.

Three elements are important to a revived competition policy in light of the present structure and conduct of agriculturally related businesses. First, stricter enforcement of current merger law to challenge those acquisitions that increase market as well as sector concentration, weaken potential competition, or create excessive vertical integration. Such a policy should also seek more frequently to block transactions in their entirety rather than permit them subject to partial divestiture. Second, antitrust law should be used to revisit and challenge, when relief is still practical, those combinations which have most dramatically increased concentration. There is no statute of limitations on the Clayton Act's prohibition against anticompetitive mergers, but it will be difficult to induce either federal law enforcement agency to re-open old cases. The best hope is for attorneys general of affected states to pursue such cases jointly. Third, the reality appears to be that the context for both purchases by farmers and their sales of products has changed. Contracts of various lengths involving a number of risks and restraints are increasingly common. It is vital to create a legal framework in which these transactions occur that will provide better information to and fairer terms for farmers. Such rules necessarily should include prohibitions on per se unfair terms. The law provides greater or lesser protection for other small businesses dealing in franchise and dealership arrangements. If farmers and ranchers must enter into such transactions, they too are entitled to protection.

The first recommendation requires no substantial elaboration. Too often in the past and even today, those charged with enforcing the anti-merger provisions of the Clayton Act either fail to challenge transactions or settle for very modest and ineffective relief. The myth of merger as an efficiency enhancing necessity seems to be as pervasive as it is wrong. By taking a very narrow view of markets and limited recognition of adverse impacts, antitrust enforcers excuse their inaction.

While the first best choice would be for the agencies themselves to be more assertive in enforcing the law, it is also appropriate to include additional participants in the process of reviewing such transactions. Several pending legislative proposals would give the Secretary of Agriculture a seat at the table when decisions to sue and to settle are being made. The Secretary's mission would be to guard the long term interests of agricultural producers. By bringing the expertise of the agency to bear on the questions of the likely harms of mergers and the potential adverse effects of specific settlements, the decision process can be improved. Currently, in electricity, telecommunications and banking, relevant federal agencies are involved in the decision process both by making their own decisions and by participating with the antitrust agencies in evaluating such transactions. Given the past failures of enforcement, it is time to include agriculturally related combinations in this category.

The second recommendation is beyond the scope of this committee or the legislative process. Because there is no statute of limitations on an anticompetitive merger, it is my emphatic suggestion that either the federal agencies or, more likely, the states should revisit and challenge those undesirable mergers for which remedy is still feasible. In the long run, the economy will work better and there will be less need for intrusive regulation of market conduct, if a more competitive structures can be recreated.

Third, while it goes against my grain as an advocate of competitive markets, it is essential to have more direct regulation of the market process in agriculture. The present structural situation on both the supply and buying sides has fostered a wide range of highly undesirable and anticompetitive strategic behaviors. To restore the balance necessary for workable markets and ensure that the long run dynamic capacity of all participants is not destroyed, it is essential that market facilitating regulations exist. Those regulations need to ensure that market conduct is as transparent and non-strategic as possible. Such regulation should limit or eliminate manipulation of market price variables, require good information including full disclosure of past and present transactions as well as forward looking commitments. Some contracting requirements should be per se illegal-they have no real use except as strategic devices. My further suggestion is that drafting such market facilitating regulation requires market specific expertise and often substantial discussions between representatives of buyers and sellers to formulate effective and minimally intrusive regulations. The role of the legislature is to define the ultimate goals for such a process and to authorize an appropriate agency to carry out the market facilitating regulatory function. The floor of the senate is no place to write detailed regulations for any industry.

One final note, the current focus of concern is largely on the selling side of agriculture. As I have reviewed both the structure and conduct of firms on the supply side, especially in the seed and herbicide area, I have come to the conclusion that the threat to competition presented by that side of the marketplace is very substantial. Building on existing regulatory concerns most of the current proposals focus exclusively or predominantly on the selling side. This is a serious omission.

In particular, the current scope of patentability and the range of rights that patent holders have obtained in the context of concentrated agricultural supply markets in which strategic behavior is very attractive is resulting in an increasing number of anticompetitive restraints on the use of new biotechnology. I would urge the committee to be attentive to these risks as well as the better known ones on the buying side.

Let me conclude by observing that robust, competitive markets have been and should remain the center of our economy. The failure to preserve and protect them will result in serious economic and social costs. This is true in general and with special emphasis in agriculture.

1. Peter C. Carstensen, The Contents of the Hollow Core of Antitrust: The Chicago Board of Trade Case and the Meaning of the "Rule of Reason: in Restraint of Trade Analysis, 15 Res. in Law and Econ. 1 (1992)

2. Quoted in Hans Theorelli, The Federal Antitrust Policy, 180 (1955)

3. U. S. v. Trans-Missouri Freight Ass'n., 166 U.S. 290, 323-324 (1897).

4. U. S. v. Aluminum Co. of America, 148 F.2d 416, 428 (2^nd Cir. 1945).

5. U.S. v. Topco Associates, Inc., 405 US 596, 610 (1972)

6. Peter C. Carstensen, How to Assess the Impact of Antitrust on the American Economy: Examining History or Theorizing, 74 Iowa L. Rev. 1175 (1989).

7. Frederick Warren-Boulton, The Case Against An "Agrarian Antitrust Policy." A paper presented at the Agricultural Outlook Forum 2000, February 24, 2000.

8. James Baker, Administer of Grain Inspection, Packers and Stockyards Administration, in testimony before the Senate Agriculture, Nutrition and Forestry Committee, Feb. 1, 2000.

9. Id.

10. Robert Taylor, The Closing Circle of Global Food Companies. A paper presented at a Democratic Policy Committee hearing, April 5, 2000.

11. For example, there is high concentration in flour milling, wet corn milling, soybean milling, cottonseed milling and malting. James M. MacDonald, Concentration in Agribusiness, Table 2. A paper presented at the Agricultural Outlook Forum 2000, Feb. 24, 2000.

12. For example, MacDonald, supra, in Table 4 shows that high levels of concentration exist in production of seeds for wheat, corn, soybeans, and cotton.

13. Id.

14. Leonard Weiss, ed., Concentration and Price (1989); see also Peter C. Carstensen, While Antitrust Was Out to Lunch: Lessons from the 1980s for the Next Century of Enforcement, 48 SMU L. Rev. 1881 (1995).

15. See, Richard Posner, The Social Costs of Monopoly and Regulation, 83 J. Pol. Econ. 807 (1975).

16. MacDonald, supra, at Table 1.

17. U.S. v. Cargill, Inc., Civil No. 99-1875, DCDC, filed July 8, 1999.

18. MacDonald, supra, Table 4, lists DuPont, Monsanto, Novartis and Dow as the leaders in corn, soybean and wheat seed sales. Monsanto alone is the dominant firm in cotton seed.

19. Id.

20. Gary W. Whalen, Nonlocal Concentration, Multimarket Linkages, and Interstate Banking, 41 Antitrust Bulletin 365 (1996).