Monday, March 13, 2006

Lack of Lawyers?

The Packers and Stockyards Act was passed in 1921 in response to concerns that, among other things, the marketing of livestock presented special problems that could not be adequately addressed by existing antitrust laws. The provisions of the act were based, in part, on prior antitrust statutes including the Sherman Act and the Federal Trade Commission Act. The Packers and Stockyards Act prohibits packers from engaging in or using any unfair, unjustly discriminatory, or deceptive practice or device, or making or giving any undue or unreasonable preference or advantage to another party. The act also makes unlawful packer anticompetitive practices that are antitrust-type actions, including a packer’s activities that manipulate or control prices or restrain trade.

The Meat markets have altered drastically over the past forty years, with massive Vertical and Horizontal intergration of Meat production. This seems unimportant if such Practices have made the Meat markets more effective. The Response to this Assessment states that the Meat markets are actually more inefficient. Capital Debt load--to finance the Corporate structure--must be considered a factor of 3-5 times the Traditional Debt load; Finance charges to be paid by the Consumer. Meat provision has focused on Prime Cut supply, with Meat markets raising the lower Cuts in train with the Prime Cut pricing; both to increase Debt load payment, and to increase Profits. Economists may not consider this a major worry, but this Author's estimates convey the idea it increased Beef Prices by over 30% above normal Production Costs, and Fish and Poultry Prices over 20%.

The Report claims the fault lay with

GIPSA’s basic investigative processes and practices were not designed for addressing the complex anticompetitive practices it had begun to encounter in recent years

and that Lawyers must be brought into the initial Investigations, to provide legal interpretation. This Author believes the Investigations could use more Accountants and fewer Lawyers. There is an obscenity somewhere in this mix, where Government Investigations must prove their allegations without the slightest imperfection, while Offenders need only claim violation of some obscure regulation--no contention of Innocense really required. It is Our Courts which might be obsolete.

A most telling quote from the Report tells it all:

Unfortunately, as the report makes clear, GIPSA’s senior management review panel became a log jam to the progress of investigations. Investigations were thwarted by management delays in providing policy and investigative guidance and by inaction on on-going investigations when they required management concurrence or direction. Further, GIPSA and OGC apparently have not effectively implemented a team approach to the investigation of complex competition related investigations. Overall, it appears that as GIPSA officials responded to the prior OIG and GAO reports, they did so in a manner that prevented, rather than facilitated the desired actions and results.

Could We need replacement of senior management? lgl

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