Allegations Of Conspiracy To Limit Crop Production: Ripe For Analysis Under Capper-Volstead


On December 2, 2011, the district court denied a motion to dismiss antitrust conspiracy claims against potato grower cooperatives in several states. In re Fresh and Process Potatoes Antitrust Litigation, United States District Court for the District of Idaho, Case No. 4:10-MD-2186-BLW. The plaintiffs alleged that the defendant cooperatives agreed among themselves, through their cooperative structure, to restrict the output of their members by limiting potato planting acreages, paying farmers to destroy existing stocks, and refraining from bringing additional potatoes to market. The alleged purpose of the output-restricting conspiracy was to augment demand among direct purchasers of potatoes, thus driving up prices. The defendant cooperatives moved to dismiss on the ground that the allegations of antitrust conspiracy were immune, pursuant to the federal Capper-Volstead Act of 1922, 7 U.S.C. § 291-292.

In the years following enactment of the Capper-Volstead Act, the United States Supreme Court has held that the Act only provides limited immunity, within its statutory terms. Thus, Capper-Volstead protection extends only to associations of "persons engaged in the production of agricultural products". If a cooperative agreement includes persons other than "producers" - such as "processors" - immunity is forfeited. However, the inquiry may become fact-specific as to the status of producer members who are vertically integrated into various levels within the distributive stream. When does a "producer" mutate into a non-exempt "processor"?

The law also has been relatively straightforward that agricultural immunity is forfeited where the cooperative, or its members, engages in "predatory" acts directed at third-parties. "Predatory" acts include, without limitation, (a) the securing of shipping space in order to deny it to a competitor; (b) boycotting, picketing, or otherwise intimidating the customers of rival processors; (c) forcibly excluding non-members from packing facilities; (d) intimidating or boycotting dealers who paid less than prices charged by the cooperative; and (e) inducing suppliers and carriers to refuse to deal with rivals. See, e.g., Areeda and Hovenkamp, Antitrust § 249 (2011).

An issue of significance in In re Fresh and Process Potatoes, however, is whether Capper-Volstead immunity extends beyond the setting of sales prices through "collectively processing, preparing for market, handling, and marketing" to efforts to augment the sales price of the commodity through agreements to restrict output...

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