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Highlights

Pursuant to a legislative requirement, GAO reviewed the Department of Agriculture's (USDA) efforts to implement the Packers and Stockyards Act, focusing on: (1) the number and status of investigations conducted by the Grain Inspection, Packers and Stockyards Administration (GIPSA) in response to complaints and concerns about anticompetitive activity involving the marketing of cattle and hogs; and (2) factors that affect GIPSA's ability to investigate concerns about anticompetitive practices.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To improve GIPSA's investigations of concerns about anticompetitive practices, the Secretary of Agriculture should develop a teamwork approach for investigations with GIPSA's economists and OGC's attorneys working together to identify violations of the law. Also, improve GIPSA's investigation processes and practices by adopting methods and guidance similar to DOJ's and FTC's for selecting, planning, conducting, and reviewing investigations. In doing so, consult with the Attorney General and the Chairman of FTC on investigation management, operations, and case development processes.
Closed - Implemented
USDA has taken action to implement this recommendation. USDA changed its organization and process for investigating competition issues to assure it uses a teamwork approach and that its investigation plans are reviewed by GIPSA and OGC attorneys. GIPSA also is assuring that its attorneys are consulted in early stages of complex investigations, and is using economic, statistical, and legal expertise in its investigations. GIPSA reviewed DOJ guidance for investigation development as a basis for establishing its investigative process for competition issues.
Department of Agriculture To improve GIPSA's investigations of concerns about anticompetitive practices, the Secretary of Agriculture should determine the number of OGC attorneys that are needed for USDA's OGC to participate in GIPSA's investigations and, as needed, assign attorneys to lead or participate in these investigations. Also, provide for senior GIPSA and OGC officials to review the progress of investigations at main decision points and provide feedback, guidance, and approval of investigations as they progress. In addition, ensure that legal specialists are used effectively by providing them with leadership and supervision by USDA's OGC attorneys and ensure GIPSA has the economic talents it requires by considering whether to modify the GS grade structure for GIPSA's economists.
Closed - Implemented
USDA has increased its staff of economists and attorneys assigned to competition cases. USDA also changed its process for investigating competition issues to assure that investigation plans are reviewed by GIPSA and OGC attorneys. GIPSA also is assuring that its attorneys are consulted in early stages of complex investigations, and is using economic, statistical, and legal expertise in its investigations.
Grain Inspection, Packers and Stockyards Administration The Administrator, GIPSA, should provide industry participants and Congress with clarifications of GIPSA's views on competitive activities by reporting publicly on changing business practices in the cattle and hog industries and identifying market operations or activities that appear to raise concerns under the Packers and Stockyards Act.
Closed - Implemented
In June 2001, in response to this recommendation, USDA's Grain Inspection, Packers and Stockyards Administration issued a report entitled "Assessment of the Cattle and Hog Industries, Calendar Year 2000." This report clarifies the Administration's views on competitive activities in these industries and identifies market activities in these industries that appear to raise concerns under the Packers and Stockyards Act. In fiscal year 2003, GIPSA received $4.5 million in appropriations for a broad study of marketing practices in the entire livestock and red meat industries from farmers to retailers, food service firms, and exporters. The study will address many questions and concerns that have been raised about changes in the structure and business practices in the livestock and meat industries, including captive supply issues. In addition, GIPSA stated that in fiscal year 2004, it plans to start a comprehensive study of the Packers and Stockyards Act in response to issues raised in GAO's report.

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