Antitrust Review Reveals Strong Co-Op Community Support for Capper-Volstead

By Borst, Alan | Rural Cooperatives, September-October 2005 | Go to article overview

Antitrust Review Reveals Strong Co-Op Community Support for Capper-Volstead


Borst, Alan, Rural Cooperatives


Agricultural producers in the United States have long enjoyed the right to collectively market their products through cooperative marketing associations. This right has been established and maintained over the last century through a series of laws, rules and regulations which have provided limited antitrust protection to such producer cooperation.

This is critical, because without such protection, tanners seeking to collaboratively market their products would face a serious risk of antitrust litigation. Beyond this enabling legal framework, the U.S. government has actively promoted agricultural cooperation through various policies and programs which have provided favorable tax treatment and access to certain program benefits.

Public officials have periodically brought some elements of this institutional infrastructure under scrutiny. The logical response of the cooperative community to such examination has been to justify the public benefits of producer cooperation and the policies and programs which enable it.

A federal commission is currently reviewing all of the laws that provide producers with some limited antitrust protections. The following article is a review of the arguments made in support of the most important federal antitrust exemption for cooperative associations--the Capper-Volstead Act of 1922 (CVA).

AMC assessing need

In 2002, Congress created the Antitrust Modernization Commission (AMC) to determine the need for reform of various antitrust laws. The AMC findings will be submitted to Congress and the President. The AMC is a 12-member, bipartisan commission composed of mostly antitrust lawyers.

There are a series of working groups under the Commission examining various aspects of U.S. antitrust laws, including one for Immunities and Exemptions. The Commission has agreed to study all antitrust immunities and exemptions to determine whether they should be repealed (if not justified by their benefits), or if they should otherwise be time-limited.

The AMC has received several submissions in response to its request for public comment in support of cooperative antitrust protections. Parties submitting comments in defense of Capper-Volstead include: the U.S. Department of Agriculture, the Congressional Farmer Cooperative Caucus, the National Council of Farmer Cooperatives, the American Farm Bureau Federation, the National Farmers Union, the National Milk Producers Federation, the Oregon Department of Agriculture and some distinguished professors with decades of experience in research on cooperatives and their enabling laws. There were no submissions that were directly critical of the CVA. The arguments in support of Capper-Volstead in these public comments follow.

CVA worldwide model

The Capper-Volstead Act is a model that has been emulated around the country and the world. CVA has been a model of cooperative legislation which many foreign countries have been using as a blueprint for their own co-op laws. U.S. government agencies are supporting the organization of agricultural cooperatives in countries around the world. All 50 states have enacted laws for agricultural cooperative incorporation and many states have antitrust exemptions for producer cooperation.

The weakening or repeal of the Capper-Volstead Act would be disruptive and costly to U.S. farmers. U.S. farmers and their cooperative marketing associations have relied upon CVA protection for the last 83 years. Any uncertainty over the future of CVA would create uncertainty over the future of cooperative enterprises that are dependent upon its protection.

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Antitrust Review Reveals Strong Co-Op Community Support for Capper-Volstead
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