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Law360 (May 15, 2020, 8:46 PM EDT) -- The U.S. Department of Justice said Friday it does not see any competitive problems with efforts from the nation's largest association of hog farmers to help coordinate the killing of unmarketable livestock accumulating in the wake of COVID-19 processing plant closures.
The DOJ's Antitrust Division issued a business review letter in response to a request from the National Pork Producers Council over its efforts to work with the U.S. Department of Agriculture and local agencies to address an oversupply of hogs during the pandemic. The group also wants to share with its members best practices for depopulating hogs that have grown too large to be processed.
The DOJ letter said it will not challenge the proposed efforts, saying they do not appear to raise any competitive concerns, but the agency reserved its right to challenge the conduct later on if its found to be anti-competitive.
Assistant Attorney General Makan Delrahim, head of the antitrust unit, said in a statement the letter addresses some of the challenges farmers face when processing capacity is constrained, and that the DOJ remains "committed to vigorous enforcement of the antitrust laws to ensure that farmers and consumers see the benefits of competition."
In a statement Friday, NPPC President Howard A.V. Roth said the goal of the coordinated efforts is to get as many hogs as possible into the food supply chain.
"Appropriate collaboration across the industry and with state and federal government officials will minimize the number of pigs that must be euthanized and ensure that it is handled humanely, and that disposal is environmentally sound," Roth said.
The DOJ noted in its letter that President Donald Trump issued an executive order April 28 that designated meatpacking plants as critical infrastructure to help address capacity problems from closures caused by outbreaks of the virus and pressure from local leaders and unions.
In its May 8 request, the NPPC told the DOJ that around 44% of pork processing capacity was offline at the end of last month. These constraints, along with lost demand for pork from restaurants and the food service industry, has caused the price of hogs to crash and is creating "overwhelming oversupply" of the livestock, according to the request.
The request also said the U.S. pork industry uses a "just-in-time" production system where only hogs of a certain size fit on the production line equipment, and once they exceed this size, farmers have little choice but to euthanize and dispose of the animals.
"It is a tragic choice, but one that thousands of hog farmers are being forced to make because of COVID-19 closures of pork packing facilities," the request said.
All told the association said experts foresee a need to euthanize as many as 700,000 hogs per week and the group believes a coordinated industry and governmental response is needed to make sure as few hogs as possible are euthanized and that it's done ethically. The NPPC's plan includes working with the USDA and state and local governments to "implement an orderly euthanization and disposal process."
The group will communicate with farmers who may need assistance with unmarketable hogs, but any coordination among farmers will be supervised by the USDA and any decisions about how many hogs to euthanize will be made by the farmers individually, according to the request.
The DOJ's review letter said the conduct described by NPPC appears like it will largely occur under the supervision and coordination of a government agency, the USDA. The letter also said the sharing of best practices for hog depopulation among farmers does not raise concerns, because the information is not competitively sensitive.
The NPPC made its request through an expedited, temporary procedure launched in March for companies that need reviews of collaborations and other business arrangements being made in response to COVID-19 and its aftermath.
--Additional reporting by Bryan Koenig and Daniel Wilson. Editing by Breda Lund.
Update: This story has been updated with a comment from NPPC.
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