Antitrust Expansion is for the Birds

By: Laurel Duggan

Four poultry executives were indicted in June on charges of price-fixing. Attentive ranchers blew the whistle about flat prices for livestock despite record profits for meat processors, resulting in Senate investigations. Several other companies are likely to be investigated over these allegations.  

Entrenched competitors are now clamoring to bolster the power of regulators through an expansion of antitrust law. 

Such proposals have the expressed goal of making the marketplace more competitive, but in reality tend to drive up prices and reduce competitiveness while giving unelected regulators sweeping power over the decisions of private businesses. 

Existing companies benefit from regulation because nascent competitors are driven out of the market by high compliance costs. It is therefore no surprise that the National Farmers Union as well as Poultry Site, an outlet funded by poultry giants including Aviagen and Cobb-Vantress, quickly came out in support of stricter antitrust enforcement and broader reach for regulators.

Reformists argue that animal agriculture industries are too concentrated, with 60% of the chicken market dominated by only five companies. They claim that high concentration drives up prices for consumers. But a 60% market share is far from a monopoly, particularly when divided between five competing firms. 

A market concentration in the poultry industry does not pose a threat to American consumers. Firms are still under considerable pressure by the law and the market to keep their prices competitive. Additionally, massive national firms still compete with a myriad of smaller businesses; if a powerhouse like Tyson sets their prices too high, consumers can buy from local competitors. Consumers can also simply purchase beef or pork instead. 

Contrary to the claims of reformists, the recent inditement does not suggest that antitrust laws are insufficient. It is a reminder that cartels never last, and that there are laws on the books to punish anticompetitive behavior. In fact, the executives may face ten years in prison and fines exceeding $1 million.

We do not need to expand antitrust law to preserve competition. The law as it stands enforces harsh penalties for anticompetitive behavior and prevents monopolization through deterrence. 

This case is just the latest in a long series of calls to expand antitrust law and empower regulators to control private businesses. Populists on both the right and left are devoted to the idea that big business is inherently bad, and hope to distort the law to break up businesses operating legally in a competitive marketplace. Such proposals would hurt consumers and empower our bureaucracy. 

This trend is most visible in the tech sector, where government actors from all directions are attempting to “break up Big Tech.” Congress, the Department of Justice, and state attorneys general are all aggressively pursuing antitrust charges against America’s most successful tech companies, all of which face considerable market competition and are bound by the same antitrust laws as other industries. 

The consumer welfare standard requires companies to cater to consumers, not bureaucrats, in order to succeed. It has allowed competition, and our economy more broadly, to flourish. We should think twice before killing the goose that laid the golden eggs.

Photo Credit: Thomas Vlerick