88 Report of the Antitrust Committee of the National Council of Farmer Cooperatives Legal, Tax and Accounting Committees William Sippel, Chair Michael Lindsay, Vice Chair

89 Northland v. Ocean Spray Antitrust complaint against Ocean Spray for Section 1 agreement with members, and for monopolistic activity centered around procurement contracts. Capper-Volstead defense. Challenge that foreign producers not qualified members. NCFC amicus. Court adopts ruling that foreign producers are persons within the meaning of Capper-Volstead.

90 Northland v. Ocean Spray Northland Settlement: Ocean Spray to purchase all Northland Processing Operations and inventory for $28 million with $5 million option to purchase 14 bogs for $42.5 million. Ocean Spray to process Northland juice under 10 year supply agreement. Northland to continue processing and selling its own juice, and manage contracts with its own growers. Northland had attempted to purchase Ocean Spray for $800 million previously.

91 United States v. DFA DFA holds 50% interest in NDH, which in turn owns Flav-o-Rich (FOR) DFA acquires 50% interest in Southern Belle, primary competitor of FOR DOJ brings Section 7 challenge, seeking divestiture

92 DFA, cont’d DFA ultimately converts ownership interest into non-voting interest with no management control and little informational rights Trial court grants DFA summary judgment –Lack of “control” defeats any presumption of injury to competition –Court rejects argument that transaction creates undue incentives for collusion or other reduction of competition

93 Eastern Mushroom Marketing Cooperative DOJ challenges nation’s largest mushroom marketing cooperative’s $6 million program to acquire mushroom farms to prevent non-members from purchasing or leasing mushroom farms. Cooperative allegedly has 90% of the “common table mushrooms grown in the eastern United States,” or, alternatively, 60% of the US agricus mushroom sales.

94 Eastern Mushroom Marketing Cooperative Organized in 2001, EMMC set minimum prices for its 15 members; prices rose 8%. Challenged Program –Cooperative started “Supply Control Assessment Program”, assessing members to pay for farm acquisitions. –Cooperative acquired non-member mushroom farms and shut them down; placed deed restrictions on acquired properties; and resold properties at a loss; also obtained lease options w –Cooperative shut down 50 million pounds of production under the program.

95 Eastern Mushroom Marketing Cooperative DOJ Challenged Supply Control Program as a violation of Section 1 of the Sherman Act. –Acknowledged cooperatives may enter into “necessary contracts”. –Acquired non-EMMC mushroom growing operations for “purpose” of shutting them down. –Deed restrictions prevented non-member farmers from acquiring property to compete with members. Relief –Elimination of deed restrictions. –Decree applies to cooperative and members.

96 Justice Department Testimony on FCMA Testimony on “The Economic Implications of Seafood Processor Quotas” Discussion of issues arising under antitrust laws and Fishermen’s Collective Marketing Act

97 DOJ Testimony, cont’d “Harvesters in cooperatives may bargain jointly and may agree on the basis for negotiations without risking antitrust liability” “an FCMA cooperative could not act jointly with non-FCMA cooperative harvesters” Applies to what otherwise would be per se violations

98 DOJ Testimony: Vertically Integrated Members “court had never address whether an integrated harvester/processor could be eligible for FCMA immunity”

99 DOJ Testimony: Information Sharing “An agreement among competitors to share information regarding price and output... Can have the effect of dampening competition, and if so can be illegal under the Sherman Act even in the absence of a direct agreement on price.” “[H]arvesters participating in an FCMA cooperative could share information within their cooperative, [but] they too would risk antitrust liability if they shared such information outside the cooperative.”

100 Antitrust Modernization Commission Antitrust Modernization Commission was created pursuant to the Antitrust Modernization Commission Act of 2002, Pub. L. No , §§ , 116 Stat Antitrust Modernization Commission Act of 2002, Pub. L. No , §§ , 116 Stat The Commission consists of 12 members, 4 of which were appointed by the President, 4 of which were appointed by the leadership of the Senate, and 4 of which were appointed by the leadership of the House of Representatives. Id. § 11054(a).

101 Antitrust Moderinization Commission One of objectives is to examine antitrust exemptions and immunities. Thus far the Commission has not limited its focus to a limited set of exemptions. It is looking at proposals to require cost/benefit for retention of exemptions, or recommend time limitations. Stay tuned.

102 Pickett v. Tyson Fresh Meat, 315 F.Supp. 2d 1172 (M.D. Ala. 2004) $1.28 billion verdict under the Packers and Stockyards Act for manipulation of cattle prices. Jury found that Tyson used captive supply to reduce the bid/ask price for cattle. Judge granted Tyson judgment notwithstanding the verdict on the ground that plaintiff failed to prove that conduct was without pro-competitive effect. Issue is Rule of Reason analysis and the introduction of a meeting competition defense. On appeal to the Eleventh Circuit Court of Appeals. Oral argument expected in early 2005.

103 Pease v. Jasper Wyman & Son, 845 A.2d 552 (Me. 2004) Class action suit by wild blueberry producers against four processors for conspiracy to fix input prices and for agreement not to compete for growers. Prices to growers based on processor prices and costs. Aggregate damage to class including opt-outs found to be $18 million, trebled.

104 Other Topics of Interest Auction Markets Bundling Group Purchasing Organizations