[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5357 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5357

 To provide for the review of agriculture mergers and acquisitions by 
  the Department of Agriculture and to outlaw unfair practices in the 
             agriculture industry, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 10, 2002

 Mr. Bereuter introduced the following bill; which was referred to the 
   Committee on Agriculture, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To provide for the review of agriculture mergers and acquisitions by 
  the Department of Agriculture and to outlaw unfair practices in the 
             agriculture industry, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Agriculture Competition Enhancement 
Act''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Agricultural commodity.--The term ``agricultural 
        commodity'' has the meaning given the term in section 102 of 
        the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
            (2) Agricultural cooperative.--The term ``agricultural 
        cooperative'' means an association of persons that meets the 
        requirements of the Capper-Volstead Act (7 U.S.C. 291 et seq.; 
        42 Stat. 388).
            (3) Agricultural input supplier.--The term ``agricultural 
        input supplier'' means any person (excluding agricultural 
        cooperatives) engaged in the business of selling in commerce, 
        any product to be used as an input (including seed, germ plasm, 
        hormones, antibiotics, fertilizer, and chemicals, but excluding 
        farm machinery) for the production of any agricultural 
        commodity.
            (4) Assistant attorney general.--The term ``Assistant 
        Attorney General'' means the Assistant Attorney General in 
        charge of the Antitrust Division of the Department of Justice.
            (5) Broker.--The term ``broker'' means any person 
        (excluding agricultural cooperatives) engaged in the business 
        of negotiating sales and purchases of any agricultural 
        commodity in commerce for or on behalf of the vendor or the 
        purchaser.
            (6) Commission merchant.--The term ``commission merchant'' 
        means any person (excluding agricultural cooperatives) engaged 
        in the business of receiving in commerce any agricultural 
        commodity for sale, on commission, or for or on behalf of 
        another.
            (7) Dealer.--The term ``dealer'' means any person 
        (excluding agricultural cooperatives) engaged in the business 
        of buying, selling, or marketing agricultural commodities in 
        commerce, except that no person shall be considered a dealer 
        with respect to sales or marketing of any agricultural 
        commodity of that person's own raising.
            (8) Processor.--The term ``processor'' means any person 
        (excluding agricultural cooperatives) engaged in the business 
        of handling, preparing, or manufacturing (including 
        slaughtering) of an agricultural commodity, or the products of 
        such agricultural commodity, for sale or marketing in commerce 
        for human consumption but not with respect to sale or marketing 
        at the retail level.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (10) Special counsel.--The term ``Special Counsel'' means 
        the Special Counsel for Competition Matters at the Department 
        of Agriculture.

SEC. 3. SPECIAL COUNSEL FOR COMPETITION MATTERS.

    (a) In General.--There shall be established within the Department 
of Agriculture a Special Counsel for Competition Matters whose primary 
responsibilities shall be to--
            (1) analyze mergers within the food and agricultural 
        sectors, in consultation with the Chief Economist of the 
        Department of Agriculture, as required by section 4; and
            (2) assure that section 5, and the Packers and Stockyards 
        Act and related authorities, are enforced appropriately.
    (b) Appointment.--The Special Counsel for Competition Matters shall 
be appointed by the President subject to the advice and consent of the 
Senate.
    (c) Prosecutorial Authority.--The Special Counsel for Competition 
Matters shall have the authority to bring any civil action authorized 
pursuant to this Act on behalf of the United States.

SEC. 4. AGRIBUSINESS MERGER REVIEW AND ENFORCEMENT BY THE DEPARTMENT OF 
              AGRICULTURE.

    (a) Notice of Filing.--The Assistant Attorney General or the 
Federal Trade Commission, as appropriate, shall notify the Secretary of 
Agriculture of any filing pursuant to section 7A of the Clayton Act (15 
U.S.C. 18a) involving a merger or acquisition described in subsection 
(b)(1), and shall give the Secretary of Agriculture the opportunity to 
participate in the review proceedings.
    (b) Special Counsel Review.--
            (1) In general.--In addition to the antitrust review 
        conducted by the Federal Trade Commission or Assistant Attorney 
        General pursuant to section 7A of the Clayton Act (15 U.S.C. 
        18a), and notwithstanding any participation in those antitrust 
        review proceedings, the Special Counsel for Competition 
        Matters, in consultation with the Chief Economist of the 
        Department of Agriculture, shall, contemporaneously, observing 
        the time period limitations provided under the antitrust laws 
        and the Department of Justice merger guidelines, and utilizing 
        the factors set forth in subsection (d), review, to determine 
        whether the proposed transaction would cause substantial harm 
        to the ability of independent producers and family farmers to 
        compete in the marketplace, any merger or acquisition 
        involving--
                    (A) a dealer, processor, commission merchant, 
                agricultural input supplier, broker, or operator of a 
                warehouse of agricultural commodities with annual net 
                sales or total assets of more than $100,000,000 merging 
                or acquiring, directly or indirectly, any voting 
securities or assets of any other dealer, processor, commission 
merchant, agricultural input supplier, broker, or operator of a 
warehouse of agricultural commodities with annual net sales or total 
assets of more than $10,000,000; or
                    (B) a dealer, processor, commission merchant, 
                agricultural input supplier, broker, or operator of a 
                warehouse of agricultural commodities with annual net 
                sales or total assets of more than $10,000,000 merging 
                or acquiring, directly or indirectly, any voting 
                securities or assets of any other dealer, processor, 
                commission merchant, agricultural input supplier, 
                broker, or operator of a warehouse of agricultural 
                commodities with annual net sales or total assets of 
                more than $100,000,000 if the acquiring person would 
                hold--
                            (i) 15 percent or more of the voting 
                        securities or assets of the acquired person; or
                            (ii) an aggregate total amount of the 
                        voting securities and assets of the acquired 
                        person in excess of $15,000,000.
            (2) Exception.--The Special Counsel for Competition 
        Matters, at his or her discretion, may also request that the 
        Assistant Attorney General or the Federal Trade Commission 
        require section 7A of the Clayton Act (15 U.S.C. 18a) 
        notification of an agriculture merger or acquisition of a size 
        smaller than is required under paragraph (1), if the Special 
        Counsel for Competition Matters believes that such transaction 
        will cause substantial harm to the ability of independent 
        producers and family farmers to compete in the market.
    (c) Notification on Failure To Proceed.--If the Assistant Attorney 
General or the Federal Trade Commission determines not to proceed 
against the parties of an agriculture merger or acquisition under the 
antitrust laws, the Assistant Attorney General or the Federal Trade 
Commission immediately shall notify the Special Counsel for Competition 
Matters of such decision.
    (d) Standard of Review.--
            (1) In general.--The Special Counsel for Competition 
        Matters, in consultation with the Chief Economist of the 
        Department of Agriculture, shall review, and may challenge, a 
        merger or acquisition described in subsection (b) based on 
        whether the merger or acquisition would cause substantial harm 
        to the ability of independent producers and family farmers to 
        compete in the marketplace.
            (2) Factors.--The review shall consider, among other 
        factors--
                    (A) the effect of the acquisition or merger on 
                prices paid to producers who sell to, buy from, or 
                bargain with, one or more of the parties involved in 
                the merger or acquisition;
                    (B) the likelihood that the acquisition or merger 
                will result in significantly increased market power for 
                the new or surviving entity;
                    (C) the likelihood that the acquisition or merger 
                will increase the potential for anticompetitive or 
                predatory conduct by the new or surviving entity; and
                    (D) whether the acquisition or merger will 
                adversely affect producers in a particular regional 
                area, including an area as small as a single State.
    (e) Evidentiary Powers.--The Special Counsel for Competition 
Matters shall have the same powers as possessed by the Assistant 
Attorney General and the Federal Trade Commission under the antitrust 
laws, to obtain evidence necessary to make determinations for the 
review described in subsection (b).
    (f) Access to Attorney General and Federal Trade Commission 
Information.--The Assistant Attorney General or the Federal Trade 
Commission, as appropriate, shall make available to the Special Counsel 
for Competition Matters any information, including any testimony, 
documentary material, or related information relevant to the review 
conducted by the Special Counsel under this section which is under the 
control of the Assistant Attorney General or the Federal Trade 
Commission. Each agency will share information, consistent with 
applicable confidentiality restrictions, in order to provide the others 
with information believed to be potentially relevant and useful to the 
others' enforcement responsibilities. Such information may include 
legal, economic, and technical assistance.
    (g) Transmittal of Findings of Special Counsel for Competition 
Matters.--After receiving notice pursuant to subsection (a) and 
conducting the review required in subsection (b), the Secretary of 
Agriculture shall report to the Assistant Attorney General or the 
Federal Trade Commission, as appropriate, and the parties, the findings 
of the review, including any recommended conditions on the merger or 
suggested remedies.
    (h) Response to Special Counsel Findings.--
            (1) Antitrust agency response to findings.--The Assistant 
        Attorney General or the Federal Trade Commission, as 
        appropriate, shall provide the Special Counsel for Competition 
        Matters a response, including the rationale as to why such 
        findings and recommendations are accepted or rejected.
            (2) Party opportunity to address findings.--The parties to 
        the merger or acquisition affected by such findings shall have 
        the opportunity to make changes to their operations or 
        structure, and to negotiate with the Special Counsel for 
        Competition Matters an acceptable resolution to any concerns 
        raised in the findings.
    (i) Enforcement.--
            (1) Judicial action.--Not later than 30 days after 
        notification by the Assistant Attorney General or the Federal 
        Trade Commission of their determination not to proceed against 
        the parties, the Special Counsel for Competition Matters, if he 
        or she is not satisfied with the review of, or the conditions 
        placed on, the merger or acquisition by the Assistant Attorney 
        General or the Federal Trade Commission, may challenge the 
        transaction in Federal court based on the findings conducted in 
        the review under this section.
            (2) Enforcement and damages.--The enforcement and damage 
        provisions of the antitrust laws shall apply with respect to a 
        violation of the substantial harm to producers and family 
        farmers standard of subsection (d) in the same manner as such 
        sections apply with respect to a violation of the antitrust 
        laws.
    (j) Conforming Amendments to Antitrust Laws.--Section 7A of the 
Clayton Act (15 U.S.C. 18a) is amended by inserting at the end the 
following:
    ``(k)(1) Notwithstanding the threshold requirements of sections 1, 
2, and 3, the Federal Trade Commission and the Assistant Attorney 
General may require, at the request of the Secretary of Agriculture, 
notification pursuant to the rules under subsection (d)(1) from the 
parties to a proposed merger or acquisition in the agriculture 
industry.
    ``(2) The Assistant Attorney General or the Federal Trade 
Commission, as appropriate, shall give the Secretary of Agriculture the 
opportunity to participate in the review under the antitrust laws of 
any proposed merger or acquisition involving the agriculture 
industry.''.

SEC. 5. PROHIBITIONS AGAINST UNFAIR PRACTICES IN TRANSACTIONS INVOLVING 
              AGRICULTURAL COMMODITIES AND ENFORCEMENT.

    (a) Unlawful Practices.--It shall be unlawful for any dealer, 
processor, commission merchant, or broker of any agricultural commodity 
to--
            (1) engage in or use any unfair, unjustly discriminatory, 
        or deceptive practice or device;
            (2) make or give any undue or unreasonable preference or 
        advantage to any particular person or locality in any respect 
        whatsoever, or subject any particular person or locality to any 
        undue or unreasonable prejudice or disadvantage;
            (3) sell or otherwise transfer to or for any other dealer, 
        processor, commission merchant, or broker, or buy or otherwise 
        receive from or for any other dealer, processor, commission 
        merchant, or broker, any article for the purpose or with the 
        effect of apportioning the supply between any such persons, if 
        such apportionment has the tendency or effect of restraining 
        commerce or of creating a monopoly;
            (4) sell or otherwise transfer to or for any other person, 
        or buy or otherwise receive from or for any other person, any 
        article for the purpose or with the effect of manipulating or 
        controlling prices, or of creating a monopoly in the 
        acquisition of, buying, selling, or dealing in, any article, or 
        of restraining commerce;
            (5) engage in any course of business or do any act for the 
        purpose or with the effect of manipulating or controlling 
        prices, or of creating a monopoly in the acquisition of, 
        buying, selling, or dealing in, any article, or of restraining 
        commerce;
            (6) conspire, combine, agree, or arrange with any other 
        person--
                    (A) to apportion territory for carrying on 
                business;
                    (B) to apportion purchases or sales of any article; 
                or
                    (C) to manipulate or control prices; or
            (7) conspire, combine, agree, or arrange with any other 
        person to do, or aid or abet the doing of, any act made 
        unlawful by paragraph (1), (2), (3), (4), or (5).
    (b) Procedure Before Secretary for Violations.--
            (1) Complaint; hearing; intervention.--If the Secretary has 
        reason to believe that any dealer, processor, commission 
merchant, or broker, has violated or is violating any provision of this 
section, the Secretary shall cause a complaint in writing to be served 
upon the dealer, processor, commission merchant, or broker, stating the 
charges in that respect, and requiring the dealer, processor, 
commission merchant, or broker, to attend and testify at a hearing at a 
time and place designated therein, at least 30 days after the service 
of such complaint; and at such time and place there shall be afforded 
the dealer, processor, commission merchant, or broker, a reasonable 
opportunity to be informed as to the evidence introduced against him 
(including the right of cross-examination), and to be heard in person 
or by counsel and through witnesses, under such regulations as the 
Secretary may prescribe. Any person for good cause shown may on 
application be allowed by the Secretary to intervene in such 
proceeding, and appear in person or by counsel. At any time prior to 
the close of the hearing the Secretary may amend the complaint; but in 
case of any amendment adding new charges the hearing shall, on the 
request of the dealer, processor, commission merchant, or broker, be 
adjourned for a period not exceeding 15 days.
            (2) Report and order; penalty.--If, after such hearing, the 
        Secretary finds that the dealer, processor, commission 
        merchant, or broker, has violated or is violating any 
        provisions of this section covered by the charges, the 
        Secretary shall make a report in writing in which the Secretary 
        shall state his findings as to the facts, and shall issue and 
        cause to be served on the dealer, processor, commission 
        merchant, or broker, an order requiring such dealer, processor, 
        commission merchant, or broker, to cease and desist from 
        continuing such violation. The testimony taken at the hearing 
        shall be reduced to writing and filed in the records of the 
        Department of Agriculture. The Secretary may also assess a 
        civil penalty of not more than $10,000 for each such violation. 
        In determining the amount of the civil penalty to be assessed 
        under this section, the Secretary shall consider the gravity of 
        the offense, the size of the business involved, and the effect 
        of the penalty on the person's ability to continue in business. 
        If, after the lapse of the period allowed for appeal or after 
        the affirmance of such penalty, the person against whom the 
        civil penalty is assessed fails to pay such penalty, the 
        Secretary may proceed to recover such penalty by an action in 
        the appropriate district court of the United States.
            (3) Amendment of report or order.--Until the record in such 
        hearing has been filed in a court of appeals of the United 
        States, as provided in subsection (c), the Secretary at any 
        time, upon such notice and in such manner as the Secretary 
        deems proper, but only after reasonable opportunity to the 
        dealer, processor, commission merchant, or broker, to be heard, 
        may amend or set aside the report or order, in whole or in 
        part.
            (4) Service of process.--Complaints, orders, and other 
        processes of the Secretary under this section may be served in 
        the same manner as provided in section 5 of the Federal Trade 
        Commission Act (15 U.S.C. 45).
    (c) Conclusiveness of Order; Appeal and Review.--
            (1) Filing of petition; bond.--An order made under 
        subsection (b) shall be final and conclusive unless within 30 
        days after service the dealer, processor, commission merchant, 
        or broker, appeals to the court of appeals for the circuit in 
        which he has his principal place of business, by filing with 
        the clerk of such court a written petition praying that the 
        Secretary's order be set aside or modified in the manner stated 
        in the petition, together with a bond in such sum as the court 
        may determine, conditioned that such dealer, processor, 
        commission merchant, or broker, will pay the costs of the 
        proceedings if the court so directs.
            (2) Filing of record by secretary.--The clerk of the court 
        shall immediately cause a copy of the petition to be delivered 
        to the Secretary, and the Secretary shall thereupon file in the 
        court the record in such proceedings, as provided in section 
        2112 of title 28, United States Code. If before such record is 
        filed the Secretary amends or sets aside his report or order, 
        in whole or in part, the petitioner may amend the petition 
        within such time as the court may determine, on notice to the 
        Secretary.
            (3) Temporary injunction.--At any time after such petition 
        is filed, the court, on application of the Secretary, may issue 
        a temporary injunction, restraining, to the extent it deems 
        proper, the dealer, processor, commission merchant, or broker, 
        and his officers, directors, agents, and employees, from 
        violating any of the provisions of the order pending the final 
        determination of the appeal.
            (4) Evidence.--The evidence so taken or admitted, and filed 
        as aforesaid as a part of the record, shall be considered by 
        the court as the evidence in the case.
            (5) Action by the court.--The court may affirm, modify, or 
        set aside the order of the Secretary.
            (6) Additional evidence.--If the court determines that the 
        just and proper disposition of the case requires the taking of 
        additional evidence, the court shall order the hearing to be 
        reopened for the taking of such evidence, in such manner and 
        upon such terms and conditions as the court may deem proper. 
        The Secretary may modify his findings as to the facts, or make 
        new findings, by reason of the additional evidence so taken, 
        and the Secretary shall file such modified or new findings and 
        his recommendations, if any, for the modifications or setting 
        aside of his order, with the return of such additional 
        evidence.
            (7) Injunction.--If the court of appeals affirms or 
        modifies the order of the Secretary, its decree shall operate 
        as an injunction to restrain the dealer, processor, commission 
        merchant, or broker, and his officers, directors, agents, and 
        employees from violating the provisions of such order or such 
order as modified.
            (8) Finality.--The court of appeals shall have 
        jurisdiction, which upon the filing of the record with it shall 
        be exclusive, to review, and to affirm, set aside, or modify, 
        such orders of the Secretary, and the decree of such court 
        shall be final except that it shall be subject to review by the 
        Supreme Court of the United States upon certiorari, as provided 
        in section 1254 of title 28, United States Code, if such writ 
        is duly applied for within 60 days after entry of the decree. 
        The issue of such writ shall not operate as a stay of the 
        decree of the court of appeals, insofar as such decree operates 
        as an injunction unless so ordered by the Supreme Court.
    (d) Punishment for Violation of Order.--Any dealer, processor, 
commission merchant, or broker, or any officer, director, agent, or 
employee of a dealer, processor, commission merchant, or broker, who 
fails to obey any order of the Secretary issued under the provisions of 
subsection (b), or such order as modified--
            (1) after the expiration of the time allowed for filing a 
        petition in the court of appeals to set aside or modify such 
        order, if no such petition has been filed within such time;
            (2) after the expiration of the time allowed for applying 
        for a writ of certiorari, if such order, or such order as 
        modified, has been sustained by the court of appeals and no 
such writ has been applied for within such time; or
            (3) after such order, or such order as modified, has been 
        sustained by the courts as provided in subsection (c);
shall on conviction be fined not less than $500 nor more than $10,000, 
or imprisoned for not less than 6 months nor more than 5 years, or 
both. Each day during which such failure continues shall be deemed a 
separate offense.

SEC. 6. REPORT ON CORPORATE STRUCTURE.

    A dealer, processor, commission merchant, or broker with annual 
sales in excess of $100,000,000 shall annually file with the Secretary 
a report which describes, with respect to both domestic and foreign 
activities, the strategic alliances, ownership in other agribusiness 
firms or agribusiness-related firms, joint ventures, subsidiaries, and 
brand names, interlocking boards of directors with other corporations, 
representatives, and agents that lobby Congress on behalf of such 
dealer, processor, commission merchant, or broker, as determined by the 
Secretary.

SEC. 7. PROHIBITION ON CONFIDENTIALITY CLAUSES IN LIVESTOCK AND POULTRY 
              PRODUCTION CONTRACTS.

    Confidentiality clauses barring a party to a contract from sharing 
terms of such contract for the purposes of obtaining legal or financial 
advice, are prohibited in livestock production contracts and grain 
production contracts (except to the extent a legitimate trade secret 
(as applied in the Freedom of Information Act, 5 U.S.C. 552 et seq.) is 
being protected).

SEC. 8. AUTHORITY TO MAKE BUSINESS AND INDUSTRY GUARANTEED LOANS FOR 
              FARMER-OWNED PROJECTS THAT ADD VALUE TO OR PROCESS 
              AGRICULTURAL PRODUCTS.

    Section 310B(a)(1) of the Consolidated Farm and Rural Development 
Act (7 U.S.C. 1932(a)(1)) is amended by inserting ``(and in areas other 
than rural communities, in the case of insured loans, if a majority of 
the project involved is owned by individuals who reside and have 
farming operations in rural communities, and the project adds value to 
or processes agricultural commodities)'' after ``rural communities''.

SEC. 9. AUTHORIZATION FOR ADDITIONAL STAFF AND FUNDING FOR AGRICULTURE 
              COMPETITION ENFORCEMENT.

    (a) Additional Staff.--The Secretary of Agriculture shall hire 
sufficient staff, including antitrust and litigation attorneys, 
economists, and investigators, to appropriately carry out the 
agribusiness merger review and prohibition against unfair practices 
responsibilities, described in sections 4 and 5.
    (b) Authorization.--There are authorized to be appropriated such 
sums as are necessary to hire the staff referenced in subsection (a) to 
implement this Act.

SEC. 10. AUTHORIZATION FOR ADDITIONAL STAFF AND FUNDING FOR THE GRAIN 
              INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION.

    There are authorized to be appropriated such sums as are necessary 
to enhance the capability of the Grain Inspection, Packers and 
Stockyards Administration to monitor, investigate, and pursue the 
competitive implications of structural changes in the meat packing 
industry. Sums are specifically earmarked to hire litigating attorneys 
to allow the Grain Inspection, Packers and Stockyards Administration to 
more comprehensively and effectively pursue its enforcement activities.

SEC. 11. ASSISTANT ATTORNEY GENERAL FOR AGRICULTURAL ANTITRUST MATTERS.

    (a) In General.--There shall be established within the Antitrust 
Division of the Department of Justice an Assistant Attorney General for 
Agricultural Antitrust Matters, who shall be responsible for oversight 
and coordination of antitrust and related matters which affect 
agriculture, directly or indirectly.
    (b) Appointment.--The Assistant Attorney General for Agricultural 
Antitrust Matters shall be appointed by the President subject to the 
advice and consent of the Senate.

SEC. 12. INCREASE IN HART-SCOTT-RODINO FILING FEES.

    (a) In General.--The filing fee the Federal Trade Commission 
assesses on a person acquiring voting securities or assets who is 
required to file premerger notifications under section 7A of the 
Clayton Act (15 U.S.C. 18a) for mergers and acquisitions satisfying the 
$15,000,000 size-of-transaction requirement is increased to $100,000 
for those transactions valued at more than $100,000,000.
    (b) Fees Earmarked.--The filing fee increase described in 
subsection (a) is partially earmarked to pay for the costs of staff 
increases at the Transportation, Energy and Agriculture section at the 
Department of Justice, as considered necessary by the Assistant 
Attorney General, to enhance their review of agriculture transactions.
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