Food & Agriculture Quarterly June 2020 - Page 6

that “giant corporations and private equity vultures are just waiting for a chance to gobble up struggling small business and increase their power through predatory mergers[.]” Likewise, Rep. Ocasio-Cortez declared that “[t]his legislation is desperately needed. Antitrust agencies have already admitted their capacity to review mergers is reduced by the crisis. Meanwhile, reports say that Rite Aid, private equity, and other big business are actively looking to scoop up smaller business and consolidate industry for their gains…If we don’t stop predatory M&As now, the actions of big corporations will have decades-long economic consequences—for all of us.” 1. While no bill text is available at this time, Sen. Warren and Rep. Ocasio-Cortez propose that the Act would do the following: a. Impose a moratorium on “risky mergers and acquisitions until the Federal Trade Commission (FTC) determines that small businesses, workers, and consumers are no longer under severe financial distress.” The moratorium includes mergers and acquisitions that involve: b. companies with over $100 million in revenue or financial institutions with over $100 million in market capitalization; c. private equity companies, hedge funds, or companies that are majority-owned by a private equity company or hedge fund; d. companies with an exclusive patent that impacts the crisis, like personal protective equipment; and e. transactions that must otherwise be reported to the Federal Trade Commission under current law. 2. Pause all waiting periods and deadlines imposed on antitrust agencies during the moratorium. 3. Direct the FTC to engage in rulemaking to establish a legal presumption against mergers and acquisitions that pose a risk to the government’s ability to respond to a national emergency. The Chairman of the House Judiciary antitrust subcommittee, David Cicilline (D-R.I.), supports the proposed Act and is trying to get the ban included in the next stimulus bill. On the other hand, FTC Commissioner Noah Joshua Phillips has suggested that the Act may not be needed. Commissioner Phillips has disputed the contentions that antitrust enforcers have been overwhelmed by merger activity during the pandemic, and has argued that mergers have “an important role to play during a period of economic adjustment.” While the legislation is unlikely to pass, the proposed Act is evidence of a growing push for increased antitrust enforcement and regulation in light of the COVID-19 pandemic. The already heightened spotlight that has shined on antitrust regulation and enforcement over the past two years is shining even brighter as a result of the COVID-19 pandemic. President Trump Invokes the Defense Production Act to Address Food Shortages On April 28, 2020 President Trump invoked the Defense Production Act (DPA) to classify processors of beef, pork, and poultry as critical infrastructure that must remain open. According to the Washington Post, at least 20 meatpacking plants closed in recent weeks because of COVID-19 outbreaks. Industry analysts estimate that pork and beef processing has fallen approximately 25 percent as a result. Recently, plaintiffs in a current class action against pork processors for allegedly conspiring to raise pork prices used President Trump’s declaration as a way of proving the plausibility of their claims. In his executive order, President Trump noted the importance of meat processors’ continued operations “to ensure a continued supply of protein for Americans.” The order concluded that the recent closures of meat processing facilities “undermine[s] critical infrastructure during the national emergency.” Thus, pursuant to his authority under the DPA, the President directed the Secretary of Agriculture to take all appropriate action to ensure that meat processors PAGE 6