7. ANTITRUST LAWS

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7. ANTITRUST LAWS

• 1. Anti trust Laws
• 2. Capper-Volstead
• 3. Other Federal Acts
• 4. State Law

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HISTORICAL CONTEXT-LATE 1800s

• Era of the Robber Barons
• Monopoly of the Railroads
• Monopoly of the Grain Merchants
• Bonanza Farms in RRV

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FEDERAL ANTITRUST

• 1890 Sherman Antitrust Act
• charter of economic liberty aimed at preserving
  free unfettered competition
• competitive forces will yield the best resource
  allocation, lowest prices, highest quality
  greatist material progress while preserving
  democratic institutions
• 1914 Clayton Federal Trade Comm.

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• Sherman Act--prohibits
• every restraint of trade
• monopolization of trade or commerce

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1914-CLAYTON FEDERAL TRADE COMMISSION ACT

• Prevents mergers or acquisition of assets of one
  company by another if the effect may lessen
  competition or tends to create a monopoly
• Allows parties to sue receive 3x
• Holds directors officers responsible
• Prohibits unfairness-acts or practices
• Partial Exemption for farm associations

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INTERPRETATION

• Terms---defined by courts
• rule of reason--illegal only if done for improper
  reasons detrimental effects
• per se--illegal regardless of reason for action

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CAPPER-VOLSTEAD ACT OF 1922

• the magna carta of farmer cooperatives
• Section One-persons engaged in producing
  agricultural products may act together in
  associations corporations to process, prepare
  for market marketing of such products so
  engaged.
• Section Two-gives the Sec. Of Ag. Right to
  regulate a cooperate that monopolize trade to the
  extent that price in unduly enhanced

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CAPPER-VOLSTEAD

• 1. No member of the association is allowed more
  than one vote
• 2. The association does not pay dividends on
  stock greater than 8
• 3. The association does not deal in products
  value of non-members greater than for
  members-absolute requirement

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COOPERATIVE MEMBERSHIP

• Who--person engaged in production of agricultural
  products
• very strict interpretation, only one counts!
• Sunkist Growers
• National Broilers
• North American Bison Cooperative

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ORGANIZATIONAL REQUIREMENTS

• -mutual benefit of members
• voting- either one vote one member or voting in
  porportion to business but not on the basis of
  ownership
• An alternative is to limit dividends to less
  than 8
• Doesnt mention cooperatives

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FARM COOPERATIVE CAN DO-ACT TOGETHER TO

• Market Bargain
• Set Prices
• Cooperation by Cooperatives
• Make Contracts
• Cooperative Size

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FARM COOPERATIVE CANNOT DO

• NonProducer (IOF) Dealings
• Predatory Practices
• Undue Price Enhancement

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1936 ROBINSON-PATMAN ACT

• Prohibits types of price discrimination, if it
  lessens competition or tends to create a
  monopoly, including rebates
• It does not prohibit patronage refunds

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1967-AGRICULTURAL FAIR PRACTICES ACT

• Prohibits interference with right of farmers to
  freely join together voluntarily in cooperatives

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STATE ANTITRUST LAWS

• Some states have antitrust laws, therefore also
  provide C-V type exemption for cooperatives

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CHALLENGE RESPONSE

• Defination of Farmers
• Business Arrangements with IOF
• Size, Power Monopolization
• Antitrust Enforcement
• Challenge to Exemption-Unfair advantage to
  farmers

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SUMMARY

• Sherman Antitrust-1890
• Capper-Volstead Act-1922
• Sets farmer cooperatives aside
• Supports the concept of cooperatives
• Requires cooperatives to play fair