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The relentless juggernaut of monopoly is pushing two bills–one sponsored by the soft drink industry and the other by the giant milk producing combines-‑through the Congress. These special interest bills are being lobbied through the Senate and the House with techniques that reveal, as if by a legislative x-ray, many of the deficiencies of that institution.
What these monopoly bills will do is to sharply increase consumer prices, protect business inefficiencies and encourage other industries to claim their special monopolistic enclaves from Congress.
The soft drink bill, S. 978, came about as a result of an enforcement action brought by the Federal Trade Commission to stop Coca-Cola, Pepsi and others from assigning their bottlers exclusive territories. Such a practice blocked competition between bottlers of a brand name d±Lnk which would lead to lower consumer prices. Rather than take their chances with the FTC, the soft drink industry marshaled their massive lobbying force of bottlers to get out of Congress an exemption from the antitrust laws and defeat the FTC that way. When the FTC brought its action in 1971, it estimated the soft drink overcharge to consumers from these anticompetitive practices at $250 million a year.
To win even liberal Senators to their cause, the soft drink lobbyists justified the bill on the grounds that it would protect small bottlers from big bottlers. The “small business” ploy won’t hold. Already, the larger bottlers are buying out the smaller ones at a rapid rate–about 15 percent of the bottlers produce 70 percent of all soft drinks. S. 978 will not stop this trend, as some small bottlers testified in opposition to the legislation. The big bottlers have been favored over the smallbottlers by the syrup manufacturers, according to the FTC and this legislation will entrench such dominance. What this bill will do is prevent these small businesses from growing by outsmarting their larger ones in open competition.
The production and processing of dairy products have long been characterized by successful lobbying at state and federal levels for legalizing monopolies to replace market pricing. The handful of giant milk producer cartels (misnamed producer coops) which control 80 percent of all U.S. milk production are being sued by the Justice Department’s Antitrust Division for over-reaching themselves in violation of the antitrust laws. Also, several of these milk combines can afford to give millions in campaign contributions to both Republicans and Democrats in Congress and to the White House to obtain higher price supports and even stronger monopoly powers.
This,in brief, is the background to provisions in S.1888—a corporate welfare bill suddenly which emerged in late May from the agribusiness-dominated Senate Agriculture and Forestry Committee. These provisions, complexly drawn as they are, would simply further collectivize the production and processing of dairy products, drive out more independent producers and raise retail prices for dairy products.
To illustrate what a lessening of competition can mean, our report, The Closed Enterprise System, cited the following situation:
“Minneapolis-St. Paul had many competing milk firms. In Duluth-Sup­erior, however, three big firms accounted for more than 90 percent of all milk sold. Although production and distribution costs for milk were similar in each market, the wholesale price for a half-gallon in 1967 was 33.8¢ in Minneapolis-St.Paul and 45c in Duluth-Superior, a 33 percent difference.”
During the hearings on S.1888, there was no consumer input desired by the Agriculture Committee members who met and voted in secret. Even the request by the Antitrust Division to comment was rejected.
Senator Philip Hart is prepared to oppose these amendments but other liberal Senators have joined their more industry-minded colleagues in supporting these provisions because the milk producers are powerful in their states, particularly the upper mid-west.
Fostering monopoly in a time of inflation would be unthinkable except in a secretive Congress deprived of organized consumer pressure. The National Consumers Congress, which emerged from the nationwide meat boycott, is organizing a boycott against the soft drink industry. They point out the price gouging and the lack of nutrition in these drinks. Consumers need to ask their members of Congress about these two bills before they are sneaked through.