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Ranchers.net

It is funny that the federal appellate courts have overturned jury verdicts to require a "harm to competition" to be shown in order to have a claim under the Packers and Stockyards Act. There is no definition of "harm to competition" and the competition between unevenness of packers to their suppliers has been a major part of most if not all cases. Obviously the "harm to competition" excuse by federal judges is not about competition of suppliers to monopsonists or oligopsonists and the control that market power can give them, but only about the competition between the monopsonists or oligopsonists (buyers) themselves. Thus, the law was changed in meaning from "justice" to "just us" (the packers) by appellate judges.

The really bad thing about the appellate decisions is that collusion between monopsonists and oligopsonists in their actions with their suppliers would be a positive defense against any legal action under the Packers and Stockyards Act. This would effectively construct a barrier to entry to new entrants who do not have captive supplies or as in the case today, of substitute suppliers of other meats. Thus, the appellate courts have allowed collusion to be an excuse "because the Packers and Stockyards Act is a law about competition". This “reasoning”, if it can be called that, first showed up as an absolute defense regarding another law, the Robinson Patman Act, and was part of the decision in the Pickett case.

In referring to the Robinson Patman Act, the 11th Circuit quoted the Robinson Patman Act’s written legal defense “That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor” (http://www.law.cornell.edu/uscode/15/13.html). The biggest mistake in that circuit’s decision was the context and who was being prohibited from what. In the Robinson Patman Act, the seller of a commodity (the packer would be a seller of a commodity) is prohibited from price discrimination to its customers. In both the Robinson Patman Act and the Packers and Stockyards Act, the one being prohibited from doing certain things is the one with possible but definitely in the recent cases, historical market power in regards to a commodity (in the case of the PSA, specifically, beef, sheep, pigs, and poultry). The Robinson Patman prohibits actions of a possible monopolist and discrimination in pricing to customers and the Packers and Stockyards Act specifically prohibits actions of the packers who have historically exercised market power against their suppliers. If the absolute defense in the Robinson Patman Act were applied with any kind of acceptable economic aptitude, the absolute defense would be one that limits the one with market power, and in this case, because you are talking about monopsonies and oligopsonies compared to monopolies and oligopolies, the sign would have to be changed and there would be an absolute defense afforded to packers if they met the same higher or better terms to the farmers competing with each other to supply the packer. Obviously this is not how the courts have been applying this law or none of the poultry cases would have been thrown out. The courts have not applied the other legal concepts in the Robinson Patman Act such as the prima-facie standard of proof for actions against packers nor the limitations in the plain reading of the law. Instead, the judges have relied on their own flawed economic intellect to come up with a nonsensical “proof of harm to competition” standard because this is a “competition” law.

This reasoning is about as logical as saying that justice should be blind so let us blind all of the justices.

The Packers and Stockyards Act is about the exercise of market power. The prohibitions contained in it are meant to make sure that the middlemen packers do not use their market power to steal value from their suppliers and then use it to compete with to get bigger or corner the market. The best justice system money can buy has denied this economic law its economic basis. It is clearly getting more evident that the best justice system money can buy has blinded the appellate justices of economic reasoning in favor of the abuse of market power and the people it can buy. Perhaps that is the best we can achieve in a democracy where economic principles are forgotten and the principals of corporate power are rewarded unduly as evidenced by the often cited and unjustified lavish CEO pay in America. It is the same problem we had with the repeal of the Glass Steagal Act and the public having to bail out Wall Street's gambling with the public's money namely that we have been through this before in our country but history is ignored because of the current buying of our democracy.

One wonders what the founders of the Constitution and our country would say to these judges who have made the law out of thin air and ignored the wisdom the Constitution gave to the legislators in writing the law and in having jury trials to prevent unreasonable decisions by judges. This is what all of the motions “as a matter of law” have been about in the recent cases. Surely they have turned a blind eye to "justice" in favor of "just us".

Our markets have become predatory with market power being the predator. The economic excuse to this has generally been welfare gains of consumers. This is a false economic premise of "free" markets. When market power is used by companies to steal value from suppliers and gives it to consumers, there is no economic gain, just a transfer of wealth. Companies use this transfer of wealth to decrease prices and gain market share or push competitors who are not cheating their suppliers of value with their market power. If this were a worthy economic principal, why not use government power to take from judges that which they would allow monopsonists or oligopsonists to take from farmers and ranchers in the name of the consumer surplus? We could then make judges who are retired to give up their retirement and go back to work. The consumer interests (or surplus in economic terms) could be enhanced in two ways: 1) We would not have to pay for their retirement and 2) We would get otherwise retired judges back to work at bargain prices.

While we are at it, why not attach any assets these judges have attained during their lifetime for the consumer surplus as long as we are buying that argument? This is what they are allowing monopsonists to do to their suppliers by not following the economic principles of the Packers and Stockyards Act. What entity on earth is more of a monopolist than the federal government?

These questions are as preposterous as the ones federal judges are asking farmers and ranchers to swallow, not to mention their disdain for their own Constitutional limits. Legislating from the bench, especially in a field like economics where both legislators and judges can be so easily duped by bought and paid for arguments of wealthy principals is dangerous to the free market system. We have already seen a financial collapse because of it in the national economy and a public bail out, but the many, many individual stories of farm families can't buy the ears that billionaires can buy and they don't have enough resources to bring common sense to the bench or to politicians. They just don't have the stomach or market power to make those purchases.

Tex
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