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More than 600 people attended the first of a series of joint workshops being held by the U.S. Department of Agriculture (USDA) and the U.S. Department of Justice (DOJ), exploring competition issues affecting agriculture and the appropriate role for antitrust and other regulatory enforcement. Led by Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, the discussions held in Ankeny showcased unprecedented cooperation between the DOJ and USDA on these issues.

First, federal and state officials discussed concerns related to competition within the industry. Next, a panel of producers offered varied opinions about competition, access to technology and production contracts.

Afternoon panels focused on the seed industry and trends in contracting, transparency and buyer power. Key concerns surrounded biotechnology and development of a generic market for genetically modified seeds, and the importance of market transparency and price reporting. Finally, a panel of enforcement officials emphasized the importance of agricultural competition issues in their jurisdictions.

The workshop ended without any clear consequences for businesses in the sector, but this show of top-level USDA-DOJ cooperation together with recent developments in antitrust enforcement could signal the direction that federal authorities are headed.

Though it is hard to predict what will ultimately come out of the workshops, the structure of the antitrust laws makes it hard for the government to treat one industry uniquely. Unlike health care or financial service regulation, it is difficult to envision broad-reaching statutory change coming out of these workshops. Rather, change is likely to come in two areas: administrative discretion – particularly in merger review – and increased antitrust enforcement.

The DOJ’s decision to sue Dean Foods post-merger to dissolve a milk acquisition shows an increased willingness of authorities to use their discretion to increase antitrust enforcement in the agricultural sector. On the one hand, clearly, there is real unease in the administration over recent consolidation in the food and agriculture industries and perceived lack of enforcement by prior administrations. On the other hand, it will be difficult to check many private business practices such as evolving forms of producer-processor contracting. The law treats almost all such activity under the “rule of reason” and courts are loath to overturn private contracting arrangements that even arguably enhance efficiency.

Another possible outcome of the workshops is increased enforcement. With states and the federal government offering additional resources and personnel, increased enforcement actions under existing law such as the Packers & Stockyards Act are likely to occur. Additional rulemaking around producer contracting is also forthcoming. In addition to final rules released in December 2009 related to the poultry industry, USDA is in the process of developing rules to implement the livestock provisions of the 2008 farm bill.

Rick Duncan is a partner in Faegre & Benson’s Minneapolis office. Jennifer Williams Zwagerman is an associate in the law firm’s Des Moines office.