Summary of a Recent
Judicial Development in
Antitrust

Cattle Marketing Agreements Do Not Violate
Packers & Stockyards Act

Alison E. Peck
National AgLaw Center Graduate Assistant

In Pickett v. Tyson Fresh Meats Inc., No. 04-12137, 2005 WL 1950272 (11th Cir. Aug. 16, 2005), the Eleventh Circuit Court of Appeals held that the plaintiffs, a class of cattle producers who sold to a meat packer exclusively on the cash market, failed to show that the packer's cattle marketing agreements violated the Packers and Stockyards Act ("PSA"). The court of appeals affirmed the district court's order granting judgment as a matter of law in favor of the packer, setting aside a jury verdict that found the packer had violated the PSA. Plaintiffs alleged that the purpose and effect of the marketing agreements was to reduce demand and to lower prices for cattle on the cash market, and, by linking marketing agreement prices to the average cash market price, also to reduce prices for cattle sold under marketing agreements. Id. at *3. Plaintiffs claimed that this purpose constituted an unfair practice and manipulated prices in violation of the PSA. Id. In interpreting the PSA, the court held that "[i]f a packer's course of business promotes efficiency and aids competition in the cattle market, the challenged practice cannot, by definition, adversely affect competition" in violation of the PSA. Id. at *6. The court of appeals held that the packer was entitled to judgment because the unrebutted evidence at trial showed that the packer had several "pro-competitive justifications for using the agreements," id. at *13, such as providing a more reliable and stable supply of cattle for meat packers, reducing transaction costs for purchasing cattle and allowing a better match of price to actual quality and yield. Id.

The case was decided on August 16, 2005; this summary was posted Sept. 23, 2005.