Abstract

"Hope in Trusts: National Broiler Marketing Association v. United States and the Limits of Countervailing Power"

Ashton Merck, North Carolina State University (ashtonwmerck@gmail.com)

This paper examines an antitrust suit and subsequent class-action suits against a short-lived agricultural cooperative, the National Broiler Marketing Association (NBMA), in the early 1970s. The NBMA was formed by a group of poultry “integrators” (including several who have since become part of multinational enterprises, including Tyson, Pilgrim’s Pride, and Ralston-Purina) who tried to counter the rising power of “consumerism.” The NBMA’s leadership sought to control production and bolster the price of chicken by utilizing an antitrust exemption reserved for agricultural cooperatives. In so doing, they drew on the logic of “self-help” and “self-control” rather than rely on government price and production controls. However, the U.S. Supreme Court struck down their cooperative as an illegal combination, primarily on the grounds that the integrators were not entitled to a legal exemption from antitrust laws afforded only to “farmers.”

Yet the integrators expressed far greater concerns about a parallel class-action suit brought by institutional and wholesale purchasers, which promised to further narrow their opportunity to marshal collective power against the retailers and buyers. When the leaders of the NBMA encountered Galbraith’s notion of “countervailing power,” they (inexplicably) imagined themselves as the small players – the farmers, the workers – rather than the middlemen or the oligopolists. Their failure in the courts paved the way for uncontrolled competition on price and quantity (“economies of speed” in the words of Al Chandler), paving the way for a global market for cheap chicken that we know today. Meanwhile, grocery retailers and fast-food chains received the bulk of the settlement money – and the future bargaining power.