IBP Boasts Of Win In P&S Suit
Despite Judge’s "Cease" Order

OMAHA, Neb. — In what critics describe as "spin" worthy of the Clinton White House, meatpacking giant IBP is claiming victory after a recent ruling that actually found it in violation of the federal Packers and Stockyards Act.

Judge William G. Jenson, USDA’s top judicial officer, ordered IBP to "cease and desist" from a pricing arrangement that gives it "right of first refusal" on fed cattle tendered by a consortium of Kansas feedlots.

Jenson ruled that IBP’s "right of first refusal" violates section 202 of the P&S Act, which prohibits anti-competitive practices.

"IBP’s failure to offer the same terms ... to other feedlots in Kansas," Jenson said, "is a discriminatory practice that gives members of the pact a competitive advantage."

For its part, IBP dismissed the ruling as "a desperate attempt by USDA to justify its long, but unfruitful prosecution of this case."

The company chose to focus instead on the fact that Jenson did not prohibit it from entering into preferential marketing agreements entirely, and did not order it to offer the same prices to all of its suppliers.

The case, which grew from a 1995 complaint by USDA’s Packers and Stockyards Administration, involves a marketing agreement between IBP and the Beef Marketing Group, originated in 1988 by nine central Kansas feedyards. The feedlot consortium maintained an arrangement with Excel from 1990 to 1993, then switched to IBP in 1994.

The agreement in dispute provides BMG a certain premium above the "practical top" for Kansas cattle in any given week, and allows IBP to match any higher bid offered by other packers.

Critics charge that its practical effect, along with other arrangements that give packers access to large numbers of fed cattle without competitive bidding, is to drive down prices on other cattle. They see vindication of that position in Jenson’s ruling.

A statement from the Cattlemen’s Legal Fund cites as a "key point in the case" the fact that Jenson "decided that in order for the government to prove a company is doing harm with its violations, it must only show that the company is harming its competitors, not the entire marketplace."

Either side may ask Jenson to reconsider the July 31 order within 10 days or appeal it to the Eighth U.S. Circuit Court of Appeals.

In a thinly veiled parting challenge to IBP, the Cattlemen’s Legal Fund says it is "unlikely" the packer will seek an appeal, "if (it) actually believes the ... decision is a ‘victory.’"