Comments to FTC submitted by Sue Beckwith September 2023

Comments on Regulation.gov
https://www.regulations.gov/comment/FTC-2023-0043-1383

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Agency: FEDERAL TRADE COMMISSION (FTC)
Document Type: Other
Title: Draft Merger Guidelines for Public Comment
Document ID: FTC-2023-0043-0001

Comment:
I am writing in support of the guidelines and I offer comments related to our food system that I hope will inform the Commissioners’ decisions regarding review of consolidation in our food system. My comments generally relate to Guideline 4, Mergers Should Not Eliminate a Potential Entrant in a Concentrated Market.

Potential market entrants aren't always known and many are small and medium size farms with gross cash farm income (GCFI) under $1 million, making it difficult to accurately evaluate their capacity to be a potential market entrant. As a result of heavy concentration in specific areas of the food system where there are two or 2 to 4 major companies providing over 80% of the product, potential new entrants face significant resistance to market entry, especially from such factors as regulation inappropriate to their size, where a single set of regulations regulates both the largest firms in the concentrated industry, as well as the smallest firms in the industry. While I understand regulatory frameworks that may have resulted from historical lack of competition are not necessarily in the purview of the FTC, I believe it's important to note this result of concentration presents significant barriers for new entrants thusly it is difficult to evaluate the effect on competition by potential entrants including small and medium farms.

Individual potential entrants in our food system are often small and mid-scale farms who, when taken alone, are unlikely to be considered when evaluating firms that may be eliminated as a potential entrant by a merger. However, when taken together as a class, there is more opportunity to examine the potential for elimination of this class as entrants to the market. It’s also noteworthy that the many decades of heavy
concentration in key food system sectors has, in practicality, eliminated the pool of potential market entrants. It will take some time in an environment of less concentration for these potential new entrants to begin operating and increasing competition.

In food systems, smaller farms and food businesses cannot compete on price. There are a variety of reasons for this including typically higher paid wages, more labor intensive processes, and economically externalized factors such as positive climate impact, increased local economic development returns, sales outlets that support community cohesiveness, and higher quality (fresher) products. In the terminology of much of the legislation, “lower prices” are perceived as good. When thinking about food systems, it’s important that FTC regulators also look at quality. Here is an excerpt from Forbes magazine that sheds light on “quality”. “The prevalence of obesity in American adults rose sharply between 1980 and 2000. Only 15% of people between the ages of 20 and 74 were considered obese in 1980, according to the National Institutes of Health, which rose to 23% by 1994 and 30.9% in 2000. The World Health Organization has blamed the rise in obesity on the disappearance of available fresh foods, control of the food chain by corporations and increasing mass production of processed foods. By March 2020, 41.9% of adults were obese, according to the Centers for Disease Control and Prevention.” (Forbes.com Sept 8, 2023)

Thank you for your kind attention. Sue Beckwith, Texas Center for Local Food