Ruling Awaited in Potato Cartel Antitrust Case

POCATELLO, Idaho (CN) – A federal judge is inching closer to a decision that will determine whether an antitrust suit against the United Potato Growers of America can proceed. U.S. District Judge Lynn Winmill presided at a case management session in December that included 27 attorneys from across the nation and another 15 by phone.

     “It’s a massive case,” said Philip Gordon, counsel for a growing list of plaintiffs that began with a single produce wholesaler in New York.
     “It all depends on how the court rules this summer,” Gordon said.
     The case hinges on whether the alleged cartel is protected by immunity under the Capper-Volstead Act.
     The Act, passed in 1922, exempts agricultural cooperatives from antitrust regulations under some circumstances.
     The judge this summer will hear motions to dismiss.
     The antitrust complaint claims the defendants conspired to fix prices, acting in “classic cartel behavior.”
     Also named in the complaint, filed in May 2010, are the United Potato Growers of Idaho who, like their co-defendant UPGA, allegedly “bribed, threatened and coerced” independent growers who resisted membership.
     “I think a careful reading of the complaint and amended complaints make it clear that the defendants were clearly engaged in fixing and setting prices through a variety of mechanisms, believing they were empowered to do so under exemption under the act,” Gordon said.
     “I don’t see a real issue there, whether the behavior that could add up to antitrust exists or not. The defendants were actually kind of proud of that.”
     The complaint claims the cartel used a variety of means to ensure compliance with their agenda.
     The cartel “monitored compliance through the use of satellite imagery, fly-overs and inspection of potato growers’ confidential reports to the Farm Service Agency; and punished violators of the cartel’s directives. The purpose and effect of the cartel is and was to fix, raise, maintain and stabilize the prices paid for fresh and process potatoes,” the complaint states.
     United Potato Growers of America spokeswoman Barb Shelly told The Idaho Statesman newspaper that the co-ops are not breaking the law.
     “We view [the complaint] as an attack on our potato farmers who work every day to grow potatoes and to provide the country with an adequate supply of potatoes at a fair price,” Shelly said.
     The cartel produces 80 percent of the nation’s fresh potatoes, with members from Florida to Alaska.
     Idaho produced 11 billion pounds of potatoes in 2010, down from roughly 13 billion pounds in 2009, according to the U.S. Department of Agriculture field office in Boise.
     “They had record levels of yields in 2009,” said a USDA spokesman. “The acreage was higher. In 2010 acreage dropped by 25,000 acres. So even if you had the same yield, you’d still have less total production.”
     Weather conditions were also cited as a reason for the drop in acreage.

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