Sunday, April 5, 2015


This article is about a challenge in federal courts claiming farmers’ cooperatives have conspired to produce less eggs, milk, mushrooms, and potatoes in order to raise the prices of their products, violating anti-trust laws.  The defendant farmers are arguing their actions are legal under the Capper Volstead Act, which they say allows them to cooperatively undertake various actions that limit product and lead to higher prices. So far, none of the courts have ruled in favor of the defendants on Capper Volstead grounds. The DOJ, the FTC, and the U.S. Department of Agriculture (USDA) have hinted the Act should be interpreted narrowly, which would not exempt the farmers, but they have not taken official action on the subject.
            Because of the Act’s breadth, it is difficult to discern what cooperative actions among farmers are legal means of price control.  Prior cases, for example, have held it is acceptable to completely withhold products from the market on a temporary basis, but no case has held farmers may limit production itself.  The article predicts how the courts will decide whether the Act exempts the farmers through interpretative tools, mainly plain language, legislative history, the whole act rule, and statutory purpose.
            The key phrase in the act is “processing, preparing for market, handling, and marketing” and the question is whether this includes limiting production as an exemption to liability.  The ordinary meaning of the phrase, along with the whole act rule, and the rule that favors interpreting anti-trust exemptions narrowly, all indicate the farmers will not fall within the exemption according to Peck.  Further, nothing in the legislative history shows congress meant to include “pre-production” limitations in the Act’s exception. However, the farmers may still not have violated anti-trust laws as the burden of proving Sherman Act violations is high and rests with the plaintiffs.  Also, the courts may apply a “rule of reason” analysis, which tends to favor defendants.  Regardless, if the farmers are not exempt under the Capper Volstead Act, consequences for farming cooperative will follow.  Farmers will either have to stop agreements to limit production or prepare to defend against future Sherman Act violation suits. 
            Overall, this article was concise and very well written.  Peck took a difficult topic with multiple statutory interpretation questions and produced a clear summary of the question facing the courts.  It seems likely the courts will agree with the article’s conclusion that the farmers pre-production limiting of products is not an exemption under the Capper Volstead Act.  
 - Liz Lafoe