Mega merger would create first coast-to-coast rail company in U.S.; farming and manufacturing sectors voice concerns

Union Pacific and Norfolk Southern railroads signed an 
agreement to merge. (Photo by Tyler Silvest, DTN CC)

Union Pacific has announced plans to merge with its smaller rival, Norfolk Southern. The $85 billion merger would create the nation's first transcontinental railroad while giving Union Pacific the power "to reshape the movement of goods from grains to autos across the country," report Sabrina Valle, Shivansh Tiwary and David French for Reuters. "If approved, the deal would be the largest ever buyout in the sector."

The mega deal, which would connect 50,000 miles of track across 43 states, "will face lengthy regulatory scrutiny amid union concerns over potential rate increases, service disruptions and job losses," Reuters reports. "The 1996 merger of Union Pacific and Southern Pacific had temporarily led to severe congestion and delays across the Southwest."

Particularly at harvest time, railroad changes, costs, delays and timing can directly impact farming incomes. The National Grain and Feed Association said in a news release "that it will undertake an extensive evaluation of the proposed merger to better understand its implications for our industry," reports Mary Kennedy for Progressive Farmer.

The American Chemistry Council weighed in and cautioned against further rail mergers. ACC leadership told Kennedy, "The impact of a transcontinental merger between two of these railroads threatens to leave American manufacturers, farmers and energy producers with even fewer competitive options to ship by rail. . . . Many rail customers are currently dealing with high rates and unreliable service. Further consolidation within the rail industry is likely to make these problems worse."

The proposed merger "reflects a shift in antitrust enforcement under U.S. President Donald Trump's administration," Reuters reports. "Executive orders aimed at removing barriers to consolidation have opened the door to mergers that were previously considered unlikely. . . .The Union Pacific merger would give the company a 43% market share, dominating most categories of commodities."

U.S. DOJ begins investigating reasons behind high egg prices, and bird flu may not be the only culprit

The rise and fall of egg prices from 2015 to 2022. (Federal Reserve St. Louis graphic, Bureau of Labor data)

Bird flu may not be the only driver of historically high egg prices throughout the United States. The Department of Justice "has opened an investigation into the cause of soaring egg prices, including whether large producers have conspired to raise prices or hold back supply," report Dave Michaels and Patrick Thomas of The Wall Street Journal. "The probe comes after prices have doubled over the past year and eggs are sometimes entirely absent from grocery store shelves."

High egg prices can mean more than an expensive omelet or a surcharge on a restaurant's border scramble. Eggs are a surprisingly common ingredient in hundreds of grocery items, which can range from baked goods to salad dressings. When egg prices increase, the overall cost of multiple products increases. 

Industry producers have "attributed high egg prices to the worst outbreak of avian flu in American history. It has resulted in the death of more than 150 million U.S. chickens, turkeys and egg-laying hens since 2022," the Journal reports. Egg producers say they have struggled to reestablish their egg-laying flocks "because even young birds, known as pullets, have been killed by the flu."

Despite spiking prices, many Americans still buy eggs, which can leave the supply chain stressed. "On average shoppers are paying about $5 a dozen, according to the Labor Department," Michaels and Thomas add. "Grocers and food distributors are paying about $8 a dozen at wholesale, which makes selling them often a money-loser."

When consumers pay double for a dozen eggs and grocers still lose money, some egg producers' huge profits may appear irregular. Lisa Phelan, an antitrust partner at Morrison Foerster, told the Journal, "Antitrust authorities often open investigations when high prices appear to stem from unusual disruptions to supply chains."

"Egg producers were losers in one recent lawsuit that alleged they restricted the supply of eggs through a trade association program," Michaels and Thomas explain. "A federal jury in Chicago found in late 2023 that Cal-Maine, Rose Acre Farms, United Egg Producers and U.S. Egg Marketers were liable for restricting supply between 2004 and 2008 through measures such as early slaughter and henhouse density restrictions." 

As egg prices continue to climb, one U.S. egg producer reports an 82% increase in revenues. What's going on?

Revenue increases at Cal-Maine has some lawmakers
and consumer advocates calling for an investigation.

Bird flu may not be the only reason U.S. egg prices are climbing. The massive profit increases at Cal-Maine, the country's biggest egg producer, suggest another reason for soaring egg costs. The company's snowballing revenue has some lawmakers and consumer advocates asking for an investigation into egg pricing practices.

"There is at least one winner in the current shortage," report Danielle Kaye and Julie Creswell of The New York Times. "Cal-Maine Foods, which controls about a fifth of the egg market reported that its revenues jumped to $954 million in the quarter that ended in late November from $523 million from the prior year — an increase of 82%."

Cal-Maine has quietly consolidated portions of the egg industry, which has helped increase its profits. "Cal-Maine has acquired more than two dozen companies since 1989. It and four other large producers control roughly half of the egg market in the United States," Kaye and Creswell explain. "The company’s net income surged more than 500% to $218 million, from year-earlier levels, thanks to higher prices, the lower cost of feed and acquisitions of other operators."

Meanwhile, U.S. consumers continue to pay more and more for a dozen eggs. "The concentration of egg production in fewer hands is raising concerns, stoked by previous findings," the Times reports. "Two years ago, the largest producers were found liable for inflating prices in the 2000s. Now, some lawmakers are calling for federal regulators to investigate the industry."

Alvaro M. Bedoya, a Democratic commissioner on the Federal Trade Commission, told the Times, "I don’t know what’s happening in the egg industry, but it sure as hell seems we should be looking into it and see if there’s anticompetitive conduct that is hurting consumers." Kaye and Creswell add, "Similar pleas from advocacy groups and lawmakers were made to the F.T.C. under the Biden administration."

Read about the egg price-fixing case filed in 2011, which went to a jury, here.

Kroger-Albertsons merger blocked by judge who sided with Federal Trade Commission's anti-trust argument

The merger would have 'nearly doubled Kroger's
store count.' (Kroger and Albertsons graphics)

The planned $20 billion merger between Kroger and Albertsons was blocked by a federal judge who "agreed with the Federal Trade Commission’s argument that Kroger would become the dominant player in traditional supermarkets if allowed to add nearly 2,000 stores by taking over Albertsons," report Dave Michaels and Patrick Thomas of The Wall Street Journal. U.S. District Judge Adrienne Nelson "rejected the companies’ counterargument that selling 579 stores to C&S Wholesale Grocers would replace the lost competition."

The ruling is a victory for FTC Chair Lina Khan, "who has waged legal battles to stop megadeals rather than accept companies’ proposed fixes to address competition concerns," Michaels and Thomas write. Kroger and Albertsons executives marketed the deal as a necessary move to compete with Walmart and Amazon.

Nelson's ruling cited the fierce "head-to-head competition" between Kroger and Albertsons, which the proposed merger "would have removed." Michaels and Thomas write, "An FTC spokesman said the ruling 'protects competition in the grocery market, which will prevent prices from rising even more.'"

If the deal had succeeded, Kroger's store count would have almost doubled, "exceeding the scale of Walmart’s 3,500 supercenters," Michaels and Thomas add. "Rodney McMullen, Kroger’s longtime chief executive, had pledged to eventually invest $1 billion annually in lowering prices at the acquired Albertsons stores. . . . FTC attorneys argued the deal would only give Kroger a reason to increase prices by removing a competitor." 

Earlier in the year, Albertsons CEO Vivek Sankaran told a federal court that "if Albertsons’s sale to Kroger was blocked, the supermarket chain would consider closing stores or laying off workers," the Journal reports. "He said that while the company’s business is sound for now, in the next two to three years it could need to find another buyer."

Hospital monopoly in Appalachia doesn't meet benchmarks; some residents say they're scared to seek care

Ballad Health's Indian Path Community Hospital has an
average ER wait time of 43 minutes. (Ballad Health photo)

The lack of choices for hospitals in parts of northeastern Tennessee and southwestern Virginia has left some residents fearful of getting care at its facilities, but hospital officials deny many patient complaints and tie their quality of care troubles to Covid-19 and nursing shortages, reports Brett Kelman of KFF Health News. "Ballad Health is the only option for hospital care in a large swath of Appalachia. . . .Lawmakers in both states "waived federal antitrust laws so two rival health systems could merge," which made Ballad Health the "largest state-sanctioned hospital monopoly in the nation."

Six years ago, lawmakers allowed the merger to prevent more hospital closures. To than end, Ballad Health has kept most of its facilities open; however, the system has "fallen short of about three-fourths of the quality-of-care goals set by the states over the last three fiscal years," Kelman explains. Those shortcomings include "failing to meet state benchmarks on infections, mortality, emergency room speed, and patient satisfaction."

Ballad's lack of consistent care has left "residents wary, afraid, or unwilling to seek care at Ballad hospitals. . according to written complaints to the Tennessee government and state lawmakers, public hearing testimony, and KFF Health News interviews," Kelman reports. "Many of those who submitted complaints or were interviewed allege that paper-thin staffing at Ballad hospitals and ERs is the root cause of the monopoly’s quality-of-care woes."

Ballad Health CEO Alan Levine defended the system's record and "said the hospitals are rapidly recovering from a quality-of-care slump caused by Covid-19 and a subsequent rise in nursing turnover and staff shortages," Kelman adds. "These issues affected hospitals nationwide, Levine said, and were not related to the Ballad merger or the monopoly it created."

Local government officials from Tennessee joined Levine during his KFF Health News interview. "As Levine spoke in a boardroom at Ballad’s hilltop headquarters, he was flanked by three local mayors who voiced support for the hospitals and said complaints came from a vocal minority of their constituents," Kelman reports.

But not every government entity echoes that support. Kelman explains, "The Tennessee Department of Health, which has the most direct oversight over Ballad Health. . . has attempted to hold Ballad more accountable for its quality of care in closed-door negotiations." The TDH declined all of KFF's requests to discuss Ballad's record.

Given the system's long list of woes, some residents wish the merger had been rejected. "Joe Macione, who for years was on the board of Wellmont Health System, one of the rival companies that became Ballad, once publicly advocated for the merger. . . . Macione said state leaders should have admitted years ago that the monopoly was a mistake," Kelman reports. Macione told him, "It has not worked."

Grocery store chains still use 'old-school' spying to out-price competitors. The practice has piqued antitrust interests.

Kroger ads provide competitors price information, but
"spies" also visit stores in person.

When big grocery stores battle for market share, most chains deploy old-timey spies who sleuth prices, quality and customer behaviors. The "old-school tactics are fueling the government’s case against Kroger-Albertsons deal," reports Patrick Thomas of The Wall Street Journal. "Grocery-store operators scrutinize the websites and promotions of rivals and send managers to walk through competitors’ stores to help establish what shoppers will pay for items."

In the case of the proposed $20 billion merger between Kroger and Albertsons, how grocery stores compete matters. Government antitrust lawyers seek to block the merger because grocery companies "commonly use rivals’ prices as a benchmark in setting their own," Thomas explains. "Federal Trade Commission attorneys argued that Kroger won’t have the same incentive to lower prices in its stores without Albertsons. Price checks can provide a ceiling for what grocers charge shoppers."

While antitrust lawyers say competition between big grocery store chains helps keep prices down, attorneys for Kroger say merging with Albertsons will enable them to compete with Walmart. Thomas adds, "Kroger and Albertsons also said they price check against a number of different competitors in a given area, including Walmart, Target, and Amazon.com’s Whole Foods Market, not just each other."

Still, the active competition between grocers demonstrates how prices can be affected by grocery store sleuthing. James McCann, the former chief executive of grocery chain Ahold USA, told Thomas, "It’s about the perception of price in your store. If you are expensive, a lot of customers will migrate to other places." Thomas reports, "McCann said it is common to send an employee across the street to a competitor three times a week to check prices on about 30 items."

Even though Walmart is the world's largest retailer, it also uses old-school spying to gain market knowledge, and in turn, the company uses that on-the-ground information to squeeze cheaper prices out of suppliers. Thomas adds, "The retailer also has regional managers visit competitors and its buyers pressure suppliers to offer lower wholesale prices if managers find items sold cheaper elsewhere, people familiar with the process said."

FCC tug-of-war over 'net neutrality' is back; having only 'one game in town' is harder on rural areas

FCC Chairwoman Jessica Rosenworcel commenting on internet services.
(Photo by Matt McClain, The Washington Post)

After a six-year stalemate, the swinging vine of net neutrality is back as the Federal Communications Commission looks to improve internet provider services for consumers. "The push comes amid widespread grievance with internet service providers — a reflection, some regulators say, of monopoly power wielded by a short list of providers," reports Eva Dou of The Washington Post. In rural areas, the pain of only one internet company is deep because customers can complain about service or connection but have nowhere else to go, and their providers can afford to ignore their historically low customer service ratings.

The debate over internet providers is underscored in its history. In 2014, when the FCC "asked the public to comment on how to regulate internet providers, such as Comcast and Verizon, it received more than a million responses. Aggrieved customers crashed the commission's website," Dou writes. In 2015, the FCC moved to take control with "the landmark 2015 decision — known as 'net neutrality' — to regulate internet service as a public utility, akin to water or electricity. . . . [It gave] the FCC broad oversight over internet service providers, including ensuring they did not discriminate or charge unreasonable rates." In 2017, the Trump administration repealed the rule.

Now, the FCC is set "to reinstate net neutrality as the law of the land. The agency argues that restoring the rule will improve consumers' experience with internet providers — including by enabling it to better track broadband service outages and network reliability," Dou reports. FCC Chairwoman Jessica Rosenworcel said in a speech Tuesday that due to high costs of entry into the market, there is often only one high-speed broadband provider in some parts of the country. 'That provider might be the only game in town,' she said. 'You need a referee on the field looking out for the public interest.'"

The reinstatement process will take months. "If the FCC gives the green light at its Oct. 19 monthly meeting, the agency will embark on a new rulemaking process with public comment," Dou adds. Tim Wu, a Columbia University Law School antitrust expert "who coined the phrase' net neutrality' in the early 2000s, said one new consideration this time around is the rise of 'Big Tech' — a term 'that didn't exist 20 years ago.'. . . While the early debate had been just about the power of internet providers, the makers of internet applications such as Google and Amazon are now vastly powerful, making it important that internet providers don't tip the scales toward one of them unfairly." Wu told Dou: "Among other things, [internet service providers'] neutrality is important to prevent making Google and Amazon unassailable."

Some farm groups object to proposed merger of Kroger and Albertsons, saying a bigger grocer will hurt small farmers

The planned merger of grocers Kroger and Albertsons "has farmers and farmworkers worried about its negative impact on farms and rural communities," reports Shelby Vittek of Ambrook Research. The National Family Farm Coalition, the National Farmers Union, Farm Action and an assortment of regional grower associations "sent a letter to the Federal Trade Commission expressing their opposition to the merger, which they said would 'create a new mega-grocery buyer with exceptional buyer power to squeeze its suppliers, shrinking farmers' and workers' share of the food dollar.'"

The merger, which could "cause conflicts with overlapping markets — Western Growers, the California Fresh Fruit Association, and Colorado Fruit & Vegetable Growers Association — submitted an additional letter to the FTC," Vitteck writes. "In it, the groups pointed to the Albertsons' acquisition of Safeway in 2015 — after which the company awarded contracts only to its largest produce suppliers, leaving smaller farmers to sell elsewhere — as an example of the negative outcomes that can be expected with a merger of this size." Their letter sums up the possible purchase: "The buying power of the newly combined Kroger entity cannot be understated."

Small farmers are already struggling to compete for sales to larger chain groceries. Vittek reports, "Farmers routinely sell their crops for less than what it costs to produce them. The pressure of farming with such small margins has led 'members to farm less acreage, move production to other countries when feasible, or leave farming altogether,' the letter from the Western grower groups read. If the Kroger-Albertsons merger is allowed to continue, competition among buyers will shrink, leaving farmers with fewer customers (in this case, grocery retailers) to work with."

American farmers face large-chain "take it or leave it" bargaining tactics, which can erase their profits, alongside competition from foreign growers. "The trade organizations that oppose the merger emphasize the harm done to American farmers as grocery retailers continue to source more foreign producers, who are ready, willing and able to undercut American producers on operating costs and the price they will accept from the retailer. . . . That is harmful for farmers, farmworkers and rural communities that depend on a robust agriculture industry.'"

The merged grocer would have 710,000 employees in 48 states, a workforce some would say already suffers from corporate greed. "Profiteering stands out at Kroger and Albertsons, with profits far outpacing worker wage growth or the cost of food," wrote Daniel Fleming and Judy Wood in a CalMatters op-ed. "Their outsize price hikes are at least partially responsible for inflation. Even while they were competing with each other, these companies jacked up prices and had record profits."

The Federal Trade Commission "is in no rush to approve the merger" because grocery prices are a big part of inflation, "a hot topic political issue that Republicans have pressed against President Biden," Thomas Lee reports for The Street.

Why are grocery prices remaining so high? Time to dust off an old law and support fair competition, writer argues

Image by Zek Tebbal, The New York Times

It's about impossible for smaller grocery stores to compete with galactic buyers like Walmart and Kroger, but without competition, food prices have gotten higher and will remain that way, writes Stacy Mitchell in her opinion for The New York Times. "To understand why grocery prices are way up, we need to look past the headlines about inflation and reconsider long-held ideas about the benefits of corporate bigness."

First off, there's no way for small stores or chains to "MacGyver" their purchasing power and cut prices that match big retailers. '"Food Fresh is the only grocery store in a rural stretch of southeastern Georgia. It has many five-star Google reviews praising its freshly butchered meats, tomato bar and friendly service. Yet it faces a threat to its survival that no amount of management skill can overcome. Big retailers like Walmart and Kroger can wrest deep discounts from suppliers, making it impossible for the store to come close to matching the chains' prices. Food Fresh's owner, Michael Gay, told Mitchell that big chains "have a handle on suppliers that I can't touch."

Is this competition at work? "Major grocery suppliers, including Kraft Heinz, General Mills and Clorox, rely on Walmart for more than 20 percent of their sales. So when Walmart demands special deals, suppliers can't say no. And as suppliers cut special deals for Walmart and other large chains, they make up for the lost revenue by charging smaller retailers even more. . . . This isn't competition. It's big retailers exploiting their financial control over suppliers to hobble smaller competitors. Our failure to put a stop to it has warped our entire food system. It has driven independent grocers out of business and created food deserts. It has spurred consolidation among food processors, which has slashed the share of food dollars going to farmers and created dangerous bottlenecks in the production of meat and other essentials. And in a perverse twist, it has raised food prices for everyone, no matter where you shop."

What's the history? "A level playing field was long a tenet of U.S. antitrust policy. In the 19th century, Congress barred railroads from favoring some shippers over others. It applied this principle to retailing in 1936 with the Robinson-Patman Act, which mandates that suppliers offer the same terms to all retailers. . . . For roughly four decades, the Federal Trade Commission vigorously enforced the act. . . . . Independent grocery stores flourished, accounting for more than half of food sales in 1958. Supermarket chains like Safeway and Kroger also thrived. This dynamism fed broad prosperity. Even the smallest towns and poorest neighborhoods could generally count on having a grocery store. And the industry's diffuse structure ensured that its fruits were widely distributed. Of the nearly nine million people working in retailing overall in the mid-1950s, nearly two million owned or co-owned the store where they worked. There were more Black-owned grocery stores in 1969 than there are today."

That's painful to hear. "Then, amid the economic chaos and inflation of the late 1970s, the law fell into disfavor with regulators, who had come to believe that allowing large retailers to flex more muscle over suppliers would lower consumer prices. For the most part, the law hasn't been enforced since. As a top Reagan administration official explained in 1981, antitrust was no longer 'concerned with fairness to smaller competitors.' This was a serious miscalculation. Walmart, which seized the opening and soon became notorious for strong-arming suppliers and undercutting local businesses, now captures one in four dollars Americans spend on groceries."

Is there an end in sight? "This has resulted in an ever-worsening cycle: As a system dominated by a few retailers lifts prices across the board — even at Walmart — consumers head to those retailers because of their ability to wrest relatively lower prices or simply because they're the only options left. . . . Meanwhile, the decline of independent grocers, which disproportionately serve rural small towns and Black and Latino neighborhoods, has left debilitating gaps in our food system. . . . Losing small retailers also stifles innovation. . . . This results in diminished selection for shoppers, who find store shelves stocked with only what the big food conglomerates choose to produce."

What can individuals do? "Stop big retailers from using their enormous financial leverage over suppliers to tilt the playing field. By resurrecting the Robinson-Patman Act, we could begin to put an end to decades of misguided antitrust policy in which regulators abandoned fair competition in favor of ever-greater corporate scale. . . . There is promising momentum. Last year an unusual coalition of Democratic and Republican lawmakers sent a letter to the FTC urging it to dust off Robinson-Patman. . . .These moves are already drawing fire from an old guard locked in bigger-is-always-better thinking. . . . In the early days of the pandemic, as Walmart and Amazon compelled manufacturers to steer scarce supplies their way and worsened shortages at local grocers,Gay [at Food Fresh] worked long days hustling to find alternate sources." Gay told Mitchell: "My meat is fresher. My produce is fresher. My customer service is better. Imagine if you made the playing field level. Imagine what I could do."

K.C. Star investigation lays out the dangers of railroads and their unwillingness to fix things without taxpayer money

Wreckage of Billy Barton's dump truck (Kansas City Star photo)

On June 27, 2022, an Amtrak train approached a crossing near Mendon, Missouri, pop. 271. The crossing was "like other crossings across the country; it had no gates or lights; brush along the tracks reduced visibility; and a steep approach could bottom-out a truck or trailer," reports The Kansas City Star. "On the tracks that day was a 2007 Kenworth dump truck driven by 54-year-old Billy Barton II of Brookfield, Missouri. . . . The high-speed collision killed Barton and three passengers on board the Amtrak and about 150 people were injured."

After the collision, the Star began investigating railroad safety, a major concern in rural areas. It found that many people had told railroad companies about dangers, and that the rail lines had refused to act unless improvements were funded by taxpayers. It also revealed:

Dangerous crossings: What happened near Mendon is not unique. Hundreds of unprotected crossings across the country have raised the fears of residents and been put on lists for safety improvements that, tragically, sometimes come too late. The Star spoke with families of victims. 

Blocked crossings cost lives: Trains don’t have to be in motion to cause deaths. States can’t limit how long a train can block motor vehicle and pedestrian traffic at public crossings, the courts have said. The results have been deadly for people like Gene Byrd, who died after a train blocked EMTs’ access to his Oklahoma house. The problem is only getting worse.

Workers endangered on the job: Railroad workers, in the news lately because of a possible strike, worry that changes in the industry are making their jobs even more dangerous. Companies have slashed their workforces and in their pursuit of profits have cut back on safety training and, employees say, equipment maintenance. Trains have gotten longer and crews smaller. Employees share their stories.

Worry about rail companies' merger: In towns up and down rail lines where a merged Kansas City Southern-Canadian Pacific Railroad would operate, residents fear the increased traffic and longer trains the deal would bring. The merger, which could come early next year, forever change the way of life in small towns like Camanche, Iowa, along the Mississippi River, the Star reports.

Proponents of journalism-competition bill still voice hope; others say it's probably dead, prefer tax-credit idea

The Journalism Competition and Preservation Act, which would let news outlets collectively bargain with Big Tech platforms for compensation for news content and set up an arbitration panel to resolve an deadlock, appears dead for this session of Congress, and with the House and Senate divided between the parties next session, it is probably dead, period.

“I think it looks pretty grim for the JCPA,” Report for America President Steven Waldman told the New England Newspaper and Press Association Thursday, the day after the JCPA was pulled from a must-pass defense bill. “I think that  was the best shot. . . . My focus right now is on the payroll tax credit, which I think has a better shot.”

Northeastern University journalism professor Dan Kennedy mentioned that alternative in the Dec. 7 edition of his Media Nation newsletter, writing, “I’m going to guess that that’s the last we’re going to hear about the JCPA because House Republicans oppose it, and time is running out for the Democratic majority to push it through. Maybe this will carve out space for a better bill, the Local Journalism Sustainability Act, which would bolster local news by creating temporary tax credits for subscribers, advertisers and publishers.”

Advocates of the JCPA "remained hopeful that Congress might muster the political will to reintroduce it," Gretchen Peck reports for Editor & Publisher, quoting America’s Newspapers CEO Dean Ridings: "America's Newspapers appreciates the efforts of Senators Amy Klobuchar, John Kennedy and so many others to pass legislation that would enable the family and independently owned newspapers to collectively negotiate for the value of their content. We hope that other members of Congress will reconsider this important legislation that would balance the playing field and compensate our members for the incredible work they do, which is important to virtually every community in the U.S."

HD Media Vice President of News and Executive Editor Lee Wolverton told E&P, “I don’t know what the future of this legislation is, but I do know that the real answer is the one we are pursuing — a remedy in court that will snap Google and Facebook’s anti-competitive stranglehold on digital advertising revenue.” Peck notes, In January 2021, the West Virginia publisher filed an anti-trust lawsuit against Google and Facebook, charging them with monopolizing digital advertising.

Journalism Competition and Preservation Act won't be in must-pass defense bill after all

"A bill that would empower news organizations to negotiate pay from big tech companies that carry their content has been dropped from a defense package after lawmakers from both sides of the aisle raised concerns about how it would affect the news ecosystem," Bloomberg Government reports. Axios reported Tuesday morning, citing sources, that the Journalism Competition and Preservation Act had been added to a defense bill that Congress must pass before adjourning.

"Some Republicans, including Senate Majority Leader Mitch McConnell, pushed back against Democratic efforts to include items they view as extraneous," Bloomberg's Maria Curl reports. "GOP lawmakers have also raised concerns about the journalism bill’s effects on the types of content shown on tech platforms, and some companies and civil liberties groups have advocated against it." Meta, "which runs Facebook and Instagram, threatened to stop carrying news on its platforms if the bill passed. Despite assurances from bill sponsor Sen. Amy Klobuchar (D-Minn.) that the bill wouldn’t affect content moderation, some GOP lawmakers said they were concerned it would censor conservative viewpoints, while some Democrats have warned it could allow for disinformation and hate speech."

The bill would have given all but very large news organizations a temporary exemption from anti-trust laws so they could negotiate compensation with tech platforms. Klobuchar warned Tuesday that without some way for news organizations to do that, “We literally are going to lose one-third of the nation’s newspapers by the year 2025. In one quarter, Google made $66 billion in ad revenue while newspapers and little radio stations folded left and right. It is about our own national future and national security.”

Journalism Competition and Preservation Act is added to must-pass defense bill; Facebook threatens to drop news

Congressional leaders have added to a must-pass defense-funding bill legislation that would force Big Tech firms like Google and Meta to pay hundreds of local news outlets for their content, prompting a threat from Meta to remove news content from Facebook, the top source of connection to news stories for online readers, Axios reports: "Barring last-minute Capitol Hill maneuvering, the news-funding measure is now on track to pass after failing for years to gather enough support to become law."

The Journalism Competition and Preservation Act would require tech firms to negotiate payout terms "in good faith" with news publishers for distributing their content, and give publishers a temporary exemption from ant-trust laws to conduct collective bargaining. "The bill doesn’t cover publishers or local broadcasters employing more than 1,500 full-time employees," Axios notes. Still, "Opponents say the bill is a handout for traditional media companies and could force Big Tech firms to pay outlets that routinely publish misinformation. They would have preferred to see almost any of several other major new tech regulations move forward in Congress instead."

Meta's threat is similar to one it made against Australian legislation last year, but the company and lawmakers "reached a compromise and the bill became law," Axios reports. "Several other countries, including Canada and New Zealand, are considering similar laws. The bottom line: This is the JCPA's last real chance at passing for the foreseeable future. It would be very difficult to get the bill over the finish line in a new Congress with divided chambers."

Senate panel sends Journalism Preservation Act to the floor; House committee could act on similar bill next week

A Senate committee approved legislation Thursday to allow smaller news publishers to negotiate with digital platforms for compensation for use of their content, after adding a Republican amendment to exclude content moderation from the negotiations.

The Senate Judiciary Committee approved the proposed Journalism Competition and Preservation Act 15-7 after adding an amendment from Sen. Ted Cruz of Texas that limits the exemption to talks conducted  “solely to reach an agreement regarding the pricing, terms and conditions” for content usage. Cruz and other Republicans have alleged that content moderation disfavors conservatives.

Cruz said his amendment makes the bill “the first meaningful consequence for and protection against censorship based on viewpoint and content in the big tech space. . . . Big Tech hates this bill. That to me is a strong positive for supporting it.” The committee's top Republican, Chuck Grassley of Iowa, voted for the bill, but most other GOP senators on the panel voted against it.

The vote came after two weeks of negotiations between Cruz and Sen. Amy Klobuchar, D-Minn., who said during the vote, “Platforms like Facebook and Google are counting on Republicans and Democrats being unable to put aside their differences to agree on meaningful legislation in the tech sector. This is our moment to prove them wrong.”

Opposition came from both ends of the political spectrum, The Wall Street Journal notes: "Sen. Mike Lee, R-Utah) reiterated his fear that the bill could make publishers more dependent on big tech platforms. Sen. Alex Padilla, D-Calif., said the bill didn’t guarantee that working journalists would benefit and argued that some of its protections for news outlets could actually exacerbate problems of hate speech on the internet. Some of those concerns were echoed by tech and public-interest groups, who said the legislation could benefit right-wing media organizations."

Opponents of the bill include Local Independent Online News (LION) Publishers. The bill applies to "most newsrooms that employ fewer than 1,500 full-time employees," The Hill reports. "The employee cap is largely aimed at excluding the country’s three largest newspapers and national broadcasters." The News Media Alliance called on key House members “to bring the bill before the House Judiciary Committee for a vote next week, likely the last opportunity to move the JCPA out of committee before the midterm elections.” The National Newspaper Association thanked the NMA "for its perseverance in working out objections to the bill," it said in a news release.

Bill to force tech giants to pay for news content is moving

"Legislation to bring the big tech platform companies to the table and negotiate compensation for news stories they use has been redrafted and will be considered by Congress over the next six weeks," Rick Edmonds reports for Poynter. "The latest version of the Journalism Competition and Preservation Act was released Monday evening. The 35-page bill is headed for committee markup revisions in early September and then likely will be voted on by both the House and Senate. If successful, the legislation could infuse billions of dollars from Google and Facebook to pay journalists over its eight-year duration. A similar law in Australia – population 27 million – has so far brought news organizations there $140 million in new revenue."

The measure would temporarily waive anti-trust laws to let news publishers collectively negotiate with online platforms in hopes of getting better compensation for using their content. If publishers and platforms can't agree on a fair price, it goes to binding arbitration. 

Large nationwide news organizations aren't eligible, but smaller nationwide publishers and any local news outlet can participate, including those owned by chains. If the bill passes, Google and Facebook will likely file lawsuits to try to invalidate it. Edmonds has more on the ins and outs of the bill, as well as its likely prospects. Read more here.

Mega-merger of poultry processors is proceeding, despite anti-trust concerns; processors ask producers to back it

A mega-merger between two of the country’s largest poultry processing companies is proceeding even as the Biden administration attempts to clamp down on antitrust violations by big agriculture companies, including 'Big Chicken'," Claire Carlson reports for The Daily Yonder. "Wayne Farms and Sanderson Farms will soon become Wayne-Sanderson Farms after the Department of Justice greenlit the acquisition of Sanderson Farms by Cargill and Continental Grain Co. in late July. Cargill and Continental already owned Wayne and a year ago announced plans to buy Sanderson.

Days after the acquisition was finalized, the Justice Department filed suit against Cargill, Sanderson and Wayne, saying the companies illegally exchanged information about poultry workers' wages in violation of federal anti-trust laws. "The lawsuit also alleges that the poultry companies pitted chicken growers against each other through deceptive practices via the poultry tournament system, which ranks chicken producers based on the speed or efficiency with which they raise chickens," Carlson reports. "Growers who can deliver more product in a shorter amount of time are paid more by poultry processing companies." The tournament system has enabled huge processors to control the entire production process, and consolidation has concentrated power in the industry to a handful of players.

Though the companies agreed to pay an $84.8 million settlement, Diana Moss, president of the American Antitrust Institute, told Carlson she worries that the lawsuit isn't enough to keep the new company from having too much control over the poultry industry. 

The Department of Agriculture "is considering a rule that would require chicken processors to provide farmers with more information so growers can advocate for themselves in sales negotiations," Carlson reports. "A second rule under review could change the way chicken packers compensate farmers who raise chickens for them. Comments on those proposed rules are due Aug. 23 and Sept. 6, respectively."

Labor advocates, former growers, and the USDA are accusing some of the nation's largest poultry processors of pressuring farmers to oppose the proposed rule. "Growers contracted to raise chickens are increasingly weighing in against that rule through form letters," Marcia Brown reports for Politico. "Some poultry processors have acknowledged sharing the pre-written letters with farmers, urging them to submit them through the public comment process or asking them to weigh in individually. In an industry already under scrutiny for wage fixing and other practices, that’s raised concerns among advocates and USDA."

Agriculture Secretary Tom Vilsack warned against pressuring farmers when the USDA announced an extension of the public comment period earlier this month. "There is fear throughout the meat and poultry industry as we saw earlier this year at two separate Congressional hearings where witnesses did not testify due to concerns of retaliation," Vilsack said in a press release. "But it is still critical that we hear the full story, so we are highlighting the option for comments to be provided anonymously."

Chicken processors to pay farmers $85 million in antitrust settlement, scrap pay system called abusive and opaque

"Cargill Inc. and the newly formed Wayne-Sanderson Farms have agreed to pay $85 million to settle claims they violated antitrust laws by sharing information about poultry workers’ wages," reports The Wall Street Journal. "The Justice Department on Monday alleged that Cargill, Sanderson Farms, a data consulting firm and Wayne Farms for decades shared information about wages and benefits in a way that held down the pay for processing plant workers. The Justice Department also alleges that the chicken companies failed to give farmers enough information about the systems used to compensate them for raising birds for slaughter."

The settlement is technically with Cargill and Continental Grain, since Cargill and Continental just bought Sanderson Farms for $4.5 billion and will merge it with Continental subsidiary Wayne Farms. Wayne-Sanderson Farms will account for about 15% of the nation's chicken production, Diane Bartz and Tom Polansek report for Reuters. Data consulting firm Webber, Meng, Sahl and Co. also settled with the government.

According to the terms of the civil settlement, contract farmers for Wayne-Sanderson would no longer be paid through the tournament system, which forces farmers to compete against each other to determine payment. The practice has long been criticized as abusive and opaque. "The companies will pay about $85 million in restitution to plant workers, of which Cargill will pay $15 million. The government would also impose a court-appointed compliance monitor to oversee processing facilities, farms and antitrust compliance for a decade, which the companies would have to fund," the Journal's Patrick Thomas and Dave Michaels report. "Wayne-Sanderson would still offer bonuses to farmers who perform well and include a base pay, assistance for accessing capital and a profit-sharing program for growers and employees."

The settlement includes other important stipulations, Reuters reports: "The companies will not be allowed to lower the base pay of chicken growers, but will be allowed to offer incentives. The agreement also prohibits retaliation for growers who raise antitrust concerns with the government."

"Monday’s settlement with the government preventing Wayne-Sanderson Farms from using the tournament system is a major shake-up in how chicken companies have done business with farmers for decades. A shift away from the tournament model by one of the largest chicken companies could give rivals a competitive advantage or prompt a broader shift away from the model in the industry, poultry industry officials and analysts have said," Thomas and Michaels report.

House passes bills on meatpacking, fertilizer and biofuels; meat measure up for vote in Senate Agriculture Committee

"Democrats, struggling to maintain their tenuous control over the House amid soaring food and fuel prices," sent the Senate a raft of bills Thursday "aimed at promoting competition in the meat sector, reducing fertilizer usage and expanding the use of biofuels," reports Agri-Pulse's Philip Brasher.

"Republicans portrayed the Lower Food and Fuel Costs Act as a 'messaging bill' that would do little to address inflation while attempting to deflect attention from the Biden administration’s policies. But the bill passed, 221-204, with support from seven Midwest Republicans:" Dusty Johnson of South Dakota, Don Bacon of Nebraska, Vicky Hartzler of Missouri, Adam Kinzinger of Illinois and Iowans Randy Feenstra, Ashley Hinson and Mariannette Miller-Meeks, Brasher reports. "Five Democrats voted no: Henry Cuellar and Vicente Gonzalez of Texas, Peter DeFazio of Oregon, Seth Moulton of Massachusetts and Peter Welch of Vermont."

GOP critics focused on a plan to create a special investigator's office in USDA’s Packers and Stockyards Division to probe allegations of unfair trade practices in meatpacking, Brasher reports: "Other provisions are intended to allow year-round sales of E15; fund additional biofuel infrastructure; increase payments under the Environmental Quality Incentives Program for nutrient management practices; increase funding for precision agriculture; establish a USDA-run Agricultural and Food System Supply Chain Resilience and Crisis Response Task Force; and authorize loan guarantees for meat and poultry processing expansion. A Democratic amendment adopted during floor debate would authorize USDA to spend $100 million to increase domestic fertilizer production, an effort Agriculture Secretary Tom Vilsack is already undertaking."

The Senate Agriculture Committee is scheduled to vote Wednesday on the its version of the investigation measure, "along with legislation to mandate minimum levels of cash trading in the cattle sector," Brasher notes. "Both measures have Senate GOP sponsors." House Agriculture Committee Chair David Scott said the need for the probe was illustrated by JBS USA CEO Tim Schellpeper's response when asked at a hearing whether packers had colluded to fix prices: “Not that I'm aware of.”

UPDATE, June 23: The Senate panel approved both bills, Successful Farming reports.

Revamped bill would give small news outlets more power in negotiating compensation from Google, Facebook

"Newly revamped federal legislation aimed at helping news publishers negotiate deals with tech giants would create a baseball-style arbitration process to settle disputes and wouldn’t apply to the biggest media companies, people familiar with the proposal said," Alexandra Bruell and Keach Hagey report for The Wall Street Journal. "The legislation amends an earlier proposal called the Journalism Competition and Preservation Act, which would allow publishers to band together to negotiate compensation from online platforms that use their content, including Meta Platforms Inc.’s Facebook and Alphabet Inc.’s Google, without violating antitrust laws."

The tech giants have claimed increasingly large shares of news sites' digital advertising dollars as many news outlets' ad revenue has collapsed. "The new proposal includes language that would require the tech companies to negotiate with publishers," Bruell and Hagey report. "After 180 days, publishers could initiate 'final offer' arbitration—sometimes called 'baseball arbitration' because of its use in baseball negotiations—to come to a deal, according to the new proposal. In that process, the arbitrator chooses one side’s final offer."

Smaller news outlets have wondered if the proposal would leave a meaningful place for them at the table, and the process seems to be moving in their direction; the new version applies only to news organizations with fewer than 1,500 employees. "The staffing threshold applies to individual publications, even when they are owned by a larger parent company. Any broadcaster with a license under the Federal Communications Commission—which would include all local TV and radio stations—would also be eligible under the new proposal," Bruell and Hagey report. "The new draft also proposes a 10-year antitrust exemption for publishers, rather than the four-year exemption in the initial legislation."

Coincidentally, a new bill was introduced to Canada's legislature this week that aims to ensure fairness in digital advertising rates for digital news, especially rural news organizations. In Australia last month, independent news publishers staged a "news freeze" in an effort to get a bigger voice in such deals in that country, its Press Gazette reports.

Justice Department probes whether chicken processors shared plant-worker pay data in order to keep wages low

"The Justice Department is investigating whether poultry companies have engaged in anticompetitive sharing about employment practices that held down plant workers’ wages, according to people familiar with the matter," Patrick Thomas and Brent Kendall report for The Wall Street Journal. Justice "is examining actions at several poultry companies, the people said, and adds to the scrutiny that U.S. meat processors are facing from the government and their workers. The department has put at least some companies on legal notice that they must preserve documents, several of these people said."

Major poultry processors Pilgrim's Pride and Perdue Farms confirmed they had received such notices; other processors such as Tyson Foods, George's and Sanderson Farms declined to comment. The Justice Department also kept mum.

Lawsuits from poultry-plant workers have alleged that their employers—which control more than 90% of poultry sold in the U.S.—shared data on wages for more than 20 years to keep worker pay down.

"The Justice Department has been broadly looking into alleged antitrust issues in the U.S. meat industry for several years, ranging from charging chicken executives with price fixing to examining meatpackers’ activities in the beef market," the Journal reports. "The Biden administration has alleged that the U.S. meat industry uses its scale to inflate Americans’ food bills, and farm groups have accused meat companies of using their market power to keep livestock prices artificially low." Processors have blamed rising prices on disruptions such as factory fires, pandemic shut-downs, and labor shortages.

In a separate but related case, 10 former poultry executives are being tried in federal court for sharing with each other what prices they charged major restaurant buyers, allegedly in order to keep prices high, the Journal reports. The defendants have all pled not guilty, saying that it's not illegal to share such information, and that there's no proof of a broad conspiracy.