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Deputy Assistant Attorney General Michael Kades Delivers Remarks on ‘Cattle Drives to Captive Supply, Competition in the Cattle Industry’ at R-CALF USA Annual Conference


Deadwood, SD
United States

Remarks as Prepared for Delivery

For those of you I haven’t had the chance to meet, my name is Michael Kades. I serve as a Deputy Assistant Attorney General in the Antitrust Division at the Department of Justice.

Thank you to those who welcomed us (my colleague Campbell Haynes and myself) into their homes and showed us their operations; thank you to the R-Calf board and the dozens of you who have shared your concerns and taken the time to educate us. I hope this speech convinces you that your advocacy is making a difference, that the Department of Justice understands your concerns, and that enforcing the antitrust laws and the Packers and Stockyards Act in agricultural markets generally and the livestock markets in particular is a priority.

My very presence here is the result of your work.

Let me tell you a story. Six years ago, I attended a conference in my home state of Wisconsin on competition in food and agriculture. At one point during the conference, this guy named Bill Bullard gave a presentation on cattle markets. I had heard of him, but I had never met him.

None of what he said will surprise you, because his presentation totally stopped me in my tracks. First, he showed a graph depicting the relationship between the price of cattle sold for slaughter and the price of beef at the store. Historically, those prices tracked each other closely. And that makes sense! High beef prices should mean healthy cattle prices. And the reverse is true, too. If there’s an oversupply of cattle, you’d expect prices at the store to go down.

Bill puts up this chart showing that in 2014, cattle prices crashed but prices at the store stayed high. That gap still exists. This doesn’t benefit ranchers or families at the grocery store. So, I thought, what gives? Who benefits?

Well, Bill answered my question later in his presentation. He showed that, again starting in 2014, the producers’ share of the retail dollar fell. At the same time, the packers’ share of the retail dollar started rising and has kept on rising. The packers win in good times and in bad.

Finally, Bill showed that, as the number of meaningful buyers declines in a given region, the value of fed cattle declines. That decline can be more than $25/head when you get down to only one buyer in an area.

Something had radically changed in this industry. Ranchers and small feedlots weren’t benefitting — far from it. Neither were consumers.

You don’t have to be a PhD economist or an expert in the cattle industry to figure out that something had dramatically changed. I’m neither, and it hit me like a ton of bricks. That change deserves an explanation, but in the last six years I have not heard a benign one. There are plenty of potentially problematic ones: collusion, alternative marketing agreements, the end of country-of-origin labeling, to name a few.

Cattle is not the only problematic livestock market. This problem is widespread across livestock. It even has name, “chickenification.” Most of you are probably familiar with that term but let me spell out my understanding of it. It means concentration — that there are few buyers for livestock. It means vertical integration up and down the food supply chain, either through direct acquisition or through contract. And it often means packers and processors shift risk to the producers without sharing the profits. In its worse form, it turns the entrepreneurs who breed and raise the livestock, who care the most about quality, into employees with little to no agency.

The processors implemented this system first onto chicken growers, and then, starting in the 1990’s, onto sheep ranchers and hog producers. Today, cow-calf operators, backgrounders, and feed lot operators face the same threat.

We are at a tipping point today. Over the past 40 years, we’ve lost something like 17,000 beef cattle operations a year. It’s hard to comprehend until you look at what has happened to hog producers or dairy farms.  

You don’t need me to make the loss of one of those cattle operations tangible. As many of you have told me, every operation lost is a family’s income gone, a grandfather’s dream to hand down the operation to the next generation — destroyed. Those losses start to add up. They spiral. Once thriving small towns are shuttered and silent. Businesses disappear, school fundraisers lose that local sponsor, and, without economic opportunity, children and grandchildren leave home, never to return. These harms ripple throughout communities across rural America. And because rural America feeds this country, they ripple throughout America.         

There are many causes for these problems. If violations of the antitrust laws or the Packers and Stockyards Act are contributing to these problems, the Antitrust Division has role – a responsibility – to address it. Our responsibility is protecting free and fair competition in the United States economy – we currently have 803 staff to cover our $28 trillion economy. Today, I want to provide a brief background on what we do, challenges we face, what we have done, and what works needs to be done.

The Antitrust Division

I don’t want to bore you with technical details about antitrust law – particularly right after lunch. I do however want to give you a broad nontechnical explanation of what we do.

In the United States, we believe that competition delivers the best results. Competition is the process of rivalry we all see play out in the markets that we participate in every single day as buyers, sellers, workers and innovators. When a group of actors (say competing businesses) or a dominant firm can thwart that rivalry, we all lose. The antitrust laws, broadly speaking, prohibit conduct that harms competition. Sellers might receive lower prices or consumers pay higher prices, success in business may no longer depend on their skill and merit, less innovation may occur, or countless other harms may occur.

Antitrust law focuses on how an action, whether it be a merger, an agreement, or a practice, distorts competition.

We also have a role, with the Department of Agriculture, in enforcing the Packers and Stockyards Act. The Packers and Stockyards Act, passed in 1921, has provisions that are similar to the antitrust laws, but it also has provisions that prohibit packer conduct that is deceptive, unfair, or unjustly discriminatory. Congress provided special protections for livestock producers. These protections focus on how packers treat livestock producers.

While conduct that is deceptive or unfair, or unjustly discriminatory can affect how competition works in a market, that conduct can and does harm market participants, regardless of its impact on competition. In contrast, the antitrust laws apply across the economy, including in livestock markets, but they focus on conduct that undermines competition.

We share enforcement authority under the Packers and Stockyards Act with the USDA. USDA has the investigatory powers. When USDA believes there is a violation has occurred involving poultry, they, with a few exceptions, must refer to the case to DOJ for enforcement. For other livestock, USDA can either bring an action within the USDA, or they can refer to the matter to the DOJ.

Challenges we face

I want to discuss the challenges we face in enforcing the antitrust laws. These are not excuses; they are not an attempt to shift blame, and they are not a request for sympathy. Rather, successful enforcement requires us to be candid about the hurdles we face and develop strategies to overcome them.

First, there has been a tendency to think of harm in terms of buyers or consumers. If competition is reduced in this market, which buyer or consumer might be hurt by that reduction in competition? But sellers, of course, can also be harmed by a reduction in competition between their usual buyers. That applies when you’re a worker, when you’re an author, and, of course, when you’re a rancher.

Second, over time, antitrust enforcement turned into a mathematical exercise focused on measuring welfare tradeoffs rather than trusting in the benefits of competition. We took up the impossible challenge of quantifying often unquantifiable effects and speculative benefits down to the last decimal point. Too often questionable or outdated economic theories displaced market realities. Those developments, along with others, raised the bar to bringing and winning antitrust cases, fostered risk aversion, and diminished antitrust law, which the Supreme Court has called the magna carta of free enterprise.

As R-Calf and many of its members know, the Packers and Stockyards Act has suffered a similar fate. Since the mid-2000s, the term “competitive injury” or “harm to competition” has slipped into the caselaw. When a court uses that term, as a practical matter, it foreshadows a loss for the livestock producers.

Third, funding for antitrust enforcement defines the scope of what the Department of Justice and the Federal Trade Commission can do. Funding for the two agencies’ antitrust enforcement was three percent higher in 2018 than 2010. But the economy grew 37 percent over that period. Essentially, the Department of Justice and the Federal Trade Commission had the same resources to police an economy that had grown by over a third.

What we have done

Over the past four years, Antitrust Division’s enforcement has reached historic levels. Discussing everything the Division has done would take hours. Let me focus on the areas most relevant to you.

Focusing on harms to sellers and workers: In 2023, we updated our Merger Guidelines, a document that explains how the Department of Justice and the Federal Trade Commission think about and evaluate mergers. Before we updated these guidelines, we talked to folks from all walks of life and held listening sessions around the country. We received literally thousands and thousands of comments on how mergers and concentration affect people in their daily lives. And we took all that to heart. Many of you may have submitted comments. We very much appreciate that, just as we appreciate R-CALF doing so as an organization. The final document emphasized, among other things, the ways some mergers can enhance buyer power in specific industries. Everyone in this audience has some experience with that.

That idea is not simply a policy statement. In 2022, we blocked a major merger in book publishing, on the theory that the decreased competition between publishers for authors and could lower author compensation. That win was a major victory for authors and for competition; it also laid down a marker that we can and will protect competition for sellers, whether authors or anyone else. Stephen King testified that the merger was scarier than any of his books.

Focusing on harm to competition not just harms to consumers: We’re not just bringing merger challenges, however. In the last two years, we’ve brought three major monopolization cases under the Sherman Act – one each against Google, Apple, and most recently LiveNation (TicketMaster). That’s more monopolization cases in two years than the antitrust division brought between 2000 and 2019.

Enforcement in the Agricultural Industry: We’re also using our Packers & Stockyards Authority and traditional antitrust authorities to address problems in agriculture. We have challenged information sharing among processors that we allege increased prices for turkey, poultry, and pork products (United States vs. Agristats). We shut down another information exchange where chicken processors were sharing compensation information was suppressing wages and benefits for employees working in poultry processing plants. (United States v. Cargill).

In cooperation with the USDA, the Antitrust Division brought its first — and second — Packers and Stockyards cases. The first alleges that that Wayne-Sanderson’s use of penalties in the tournament system is deceptive because growers failed to receive information that would allow them to assess the risk they were undertaking. In a historic settlement, Wayne-Sanderson agreed to stop penalizing chicken growers in the tournament system and to limit bonus payments to 25% of overall compensation.

In the second case, Koch Foods was penalizing chicken growers that switched to a competing processor. We alleged that Koch’s practice violated both the antitrust laws and the Packers and Stockyards Act.

In both those cases, we do not use the term competitive injury or harm to competition. Rather, the complaints explain why the conduct is deceptive or unfair and how that conduct harms the producer. These are the first steps of the Department of Justice and the USDA in restoring the scope the act. The USDA has already relied on the Wayne-Sanderson action as a basis for its rulemaking on the tournament system.

Thanks to legislation passed by the last Congress, we’re slowly restoring our funding. R-Calf has been a leader in calling for more resources.

What Is To Be Done

The question you all might be asking now is okay, this is great—but where’s the beef? What about our industry? The steps we have taken in other industries or in other parts of agriculture are laying the groundwork for more effective enforcement across industries and including cattle.

We have more work to do. That is why I’m not here to take a victory lap.

Good policy follows good personnel. That’s why I’m proud to announce today that we are using our increased funding to stand up a team of enforcers focused on agriculture. This team will be based out of Chicago, nearer to you and to the conduct they will police. They will have the leadership and the commitment of our entire division behind them. They will focus on the hard cases and the big swings.

One last thing: our success depends, in part, on being able to learn from you all. We have heard about troubling reports about the conduct of some buyers at some auction barns. – conduct that could be illegal. I have brought some fliers that identify the type of conduct that is of interest, how to contact either the Department of Justice or USDA, and our commitment to protecting the confidentiality of the both the substance of the information and person providing the information.


As I wrap up, vigorous antitrust enforcement and restoring the Packers and Stockyards Act is not a silver bullet that will solve all the challenges you face. Failing to enforce those laws, however, exacerbates those problems not just for you directly but ripples through your communities.

I want to say how glad I am to be here and how glad we are to be with you in this fight. And please—don’t applaud us yet. There is more work to be done, and I want you all to hold us accountable every step of the way. We won’t rest until we’ve delivered.

Updated June 24, 2024