Source:  Lisa M. Keefe, MEATINGPLACE.COM, 12/16/09

A decision this week by the U.S. Court of Appeals for the Fifth Circuit, in New Orleans, is being seen as a boon for processors as the issue of competition in the industry heats up.

The case, Wheeler V. Pilgrim's Pride Corp., concerns the question of establishing a claim under Sections 202(a) or 202(b) of the Packers and Stockyards Act of 1921. As explained by Len Steiner and Steve Meyer in the Daily Livestock Report, a lower court found that the mere practice of anti-competitive tactics violated the PSA; the appeals court overturned that decision, saying actual harm to competition must be proven, or that actual harm is a likely result of the practice.

"It is an important decision that clarifies the PSA and its scope after Congress in recent years has made poultry and swine contractors … subject to the PSA," the analysts wrote. Other rulings in Circuit Court and by the U.S. Supreme Court "and the original report language from Congress again led this court to leave the Act about competition, not practices per se."

In a release, the American Meat Institute explained that "the issue whether the PSA requires a showing of anticompetitive effect is of enormous importance to the poultry and meat packing industries. If an anticompetitive effect were not required to establish a PSA claim, liability under the PSA would be virtually limitless."

Steiner and Meyer wrote: "The big question generally boils down to this: Are we better off with some small amounts of market power and large, very efficient companies or with no market power and smaller, less efficient companies?"

The plaintiffs in Wheeler vs. Pilgrim's Pride Corp. have 90 days to decide if they will appeal the decision to the U.S. Supreme Court.