Clap-Clap, FTC Says As It ‘Applauds’ USDA’s Bid To Beef Up Packers Suits

The Federal Trade Commission had its clapping hands out Wednesday for a proposed U.S. Department of Agriculture rule that would make it easier for the USDA, and probably those people of the land it supports, to yell loud, proud and in court at unfair livestock, meat and poultry industry practices.

On one of those odd-numbered days where all five commissioners agreed on something (we don’t actually know if there’s a pattern, but seriously, they’re either all in or all at each other’s Senate-confirmed throats in party-line splits), the FTC backed a rule floated by the USDA in June to clarify all the niceties and less niceties required to convince a federal judge that the Packers and Stockyards Act has been violated.

The Packers and Stockyards Act, passed in 1921 (before PSA meant something else), has become one of those toys that Biden administration regulators discovered in the attic and have been super keen to dust off and play with like a slinky. For the USDA, that has meant a bunch of rulemakings, and for some at the FTC, it has meant calls to use the law as another enforcement tool.

The latest way to use that toy, as envisioned by the USDA’s rulemaking: push back on the requirement imposed by some judges weighing PSA suits for a showing of “competitive injury.” No longer content to let PSA suits alleging deceptive, discriminatory or otherwise unfair practices by live poultry dealers, meat packers and swine contractors play out on a case-by-case basis, the rulemaking, if finalized, would lay out exactly what evidence is required for a PSA suit and show that the law “does not necessarily require harm to competition” and “addresses conduct in its incipiency, does not require proof of actual harm, nor does it require proof of predatory intent.”

All those fancy words likely mean it would be easier to bring PSA suits, both for the USDA itself and, perhaps, for farmers, because the agency has explicitly asked for comment about whether private suits should be treated any different than ones it brings directly. With a slightly less fancy word announcing its support for the rulemaking, the FTC said in a statement Wednesday that it “applauds USDA’s push to revitalize the PSA by dispelling confusion about its requirements.”

“The comment notes that imposing a difficult-to-meet competitive injury requirement is counter to the plain text of the PSA. At a time when lower food costs to consumers and supply chain resilience are critically needed, interpretations of the PSA should not put access to justice out of reach for farmers,” the FTC said Wednesday in announcing the comment submission. “The proposed rule correctly recognizes that, based on the PSA’s plain text and its relationship to the FTC Act, competitive injury is not required for a PSA violation.”

The FTC decided to use those clapping hands (fingers? Keyboards?) on the very last day that the USDA was accepting submissions, after extending what had been an Aug. 27 deadline by another 15 days. Having gotten more time to finish its homework, the FTC’s comment was definitively supportive of PSA suits not just by the USDA, but by farmers with threshers and combines and whatever else it is that puts the yummy meat on our plates.

“As farmers have explained, inconsistent applications of a competitive injury requirement, and the uncertainty around whether such a burden exists at all, undermines their right to redress under the PSA,” the agency said in the comment approved by all five commissioners.

“A difficult-to-meet competitive injury requirement is not only counter to the plain text of the PSA and congressional intent; as a practical matter it negates the statute’s private right of action, which permits a farmer to recover damages when injured by an unfair act,” the FTC continued. “Based on the FTC’s experience in litigating cases, the type of expert economic analysis required to show market-wide harm in an antitrust case can cost millions of dollars.”

Looking at the text of the PSA and its own authorities that don’t go as far, the FTC argued the law clearly includes no requirement “for proof of an adverse effect on competition as an element of a claim.”

Why they couldn’t just say ‘it would make it harder to compete,’ we can’t say. But we’re pretty sure we get the gist when the FTC comment says that as far as courts have interpreted the law “to require a showing of competitive injury, such an interpretation is belied by the plain text of the PSA.”

“Recognizing the relationship between the PSA and the FTC Act, the proposed rule gets it right,” the FTC said. “Because the PSA’s prohibition on unfairness is by its plain text broader than the FTC Act, and the FTC Act’s unfair trade practices prohibition does not itself require a showing of market-wide ongoing harm to competition, the proposed rule correctly recognizes that competitive injury is not required for a PSA violation.”

—Editing by Vaqas Asghar and Emily Kokoll.