The action was brought by a consumer against Leegin Creative Leather Products, Inc.—the manufacturer and retailer of Brighton handbags, accessories, and luggage. The defendant is the same company whose pricing practices were considered by the U.S. Supreme Court in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877. In that decision, the U.S. Supreme Court held that, for purposes of a Sherman Act claim, the pricing practices were subject to “rule of reason” analysis. The Kansas Supreme Court rejected Leegin’s argument that the consumer’sKansasantitrust claims were blocked by the rule of reason.

The consumer was permitted to pursue both horizontal and vertical price fixing claims on remand.  Vertical and horizontal price fixing agreements are per se violations of the KRTA, the court ruled. The court rejected Leegin’s argument that, because it was a dual distributor and dual-distribution systems were treated as vertical arrangements under federal law, the consumer’s allegations did not support a horizontal price fixing claim. The applicable provisions of the KRTA neither differentiated between vertical and horizontal price fixing nor outlined a particular approach to a dual-distribution situation. The provisions prohibited all price fixing combinations or arrangements, regardless of the applicable label. To the extent the consumer’s horizontal price fixing claim rested on conduct identical to that supporting her vertical price fixing claim, horizontal price fixing was an alternative theory of liability. Proof of an alternative theory did not entitle a plaintiff to additional damages, but it gave a factfinder another way to get to judgment in the plaintiff’s favor, the court explained.

Antitrust Injury

In addition, the court ruled that the consumer was not required to provide “concrete evidence” that she personally paid higher prices for Brighton products as a result of the manufacturer’s resale price maintenance (RPM) policy in order to avoid summary judgment for failure to establish “antitrust injury.” A genuine issue of material fact on injury precluded summary judgment in light of the RPM policy, its written pricing agreements, and its enforcement practices, as well as expert testimony. The expert opined that the manufacturer’s practices fixed the prices of its products, severely limiting discounting. The expert based his conclusions on information from the manufacturer regarding its practices, a survey of “authoritative opinion” on the effects of vertical price fixing in general, and “empirical evidence” of the impact of price fixing documented by other scholars. There was adequate circumstantial evidence that consumers actually paid inflated prices for Brighton goods.

Leegin’s contention that the consumer was required to offer proof of injury or damage in the form of a “benchmark analysis” set too high a bar, according to the court. Under the benchmark analysis approach, the consumer would have needed: (1) to conduct a benchmark analysis comparing the actual retail prices of the manufacturer’s products before and after the manufacturer allegedly crossed the line between a lawful pricing policy and unlawful pricing agreements, (2) to compare the prices of the manufacturer’s accessories against the prices of similar accessories from manufacturers who did not impose price restraints, or (3) to collect affidavits from Kansas retailers who were prevented from discounting.

Statute of Limitations

The consumer’s claims for full consideration damages and treble damages were both subject to a three-year statute of limitations, the court ruled. They were civil remedies, not penalties. The court rejectedBrighton’s call for an application of the one-year statute of limitations for an “action upon statutory penalty or forfeiture, on the ground that full consideration and treble damages provisions were statutory penalties because they awarded more than actual damages and were cumulative with actual damages. Moreover, the three-year statute of limitations gave a greater incentive to consumers to exercise their statutory rights by bringing private actions under the KRTA.

Class Actions

The consumer represented a class of similarly situated purchasers of Brighton products. Leegin had moved to decertify the class, but the lower court did not reach the issue. The State Supreme Court decided that it would be best for decertification to be considered on remand.

Legislative Response

Kansas legislators have quickly responded to the decision. A measure (HB 2797) was introduced in the Kansas Legislature on May 10, 2012, to overturn the court’s rejection of rule of reason analysis. The bill would call for harmonizing the KRTA with Sec. 1 of the Sherman Act.  Under the measure, an agreement that  would be deemed a reasonable restraint of trade or commerce under Sec. 1 of the Sherman Act may not be deemed unlawful under Kansas law. The measure also would prohibit private class action lawsuits.

The May 4, 2012, decision in O’Brien v. Leegin Creative Leather Products, Inc.,  No. 101,000, appears at (CCH) 2012-1 Trade Cases ¶ 77,884.

Increase in HSR Filings

According to recently released workload statistics, summarizing Antitrust Division activities over the preceding 10-year period (FY 2002 – 2011), there were 1,450 premerger notifications under the Hart-Scott-Rodino (HSR) Act in FY 2011.

The number of HSR filings in FY 2011 was more than double the number in FY 2009 (716). From FY 2010 (1,166) to FY 2011, there was a more than 24 percent increase in HSR filings. While the trend reflects healthy increases in large merger activity recently, the number of filings don’t come close to the recent high of 2,201 in FY 2008.

Merger Cases

The Antitrust Division filed 13 merger cases in FY 2011. This was the highest number of merger cases filed since FY 2008 (15). There were only seven merger cases filed in FY 2009 and 10 merger cases filed in FY 2010.

Among the transactions challenged in FY 2011 were mega-mergers, such as AT&T’s ultimately abandoned acquisition of T-Mobile USA Inc. and the combination of Comcast Corp and General Electric Co.’s subsidiary NBC Universal Inc. However, the Antitrust Division also brought two cases involving non-reportable mergers.

The first of the two challenges to transactions that did not meeting the HSR reporting thresholds was filed in May 2011. In that case, the Antitrust Division moved to block George’s Incorporated’s acquisition of a Tyson Foods poultry processing plant in Virginia. George’s later consented to a settlement requiring it to make capital improvements to the plant in order to increase in the number of chickens processed at the facility, thereby increasing the demand for grower services ((CCH) 2011-2 Trade Cases ¶77,679). In November, the Antitrust Division announced a challenge to an agreement between Blue Cross Blue Shield of Montana and five of six Montana hospitals that own New West Health Services, a health insurer that competes with Blue Cross in Montana. A consent decree resolving the matter was approved by the federal district court in Montana last month.

Merger Investigations

The number of merger investigations was up in FY 2011 over the three preceding years. While there was about a 24 percent increase in the number of HSR filings from FY 2010 to FY 2011, the number of investigations increased more than 30 percent (from 55 to 72).

Thirty one of the of the 72 HSR investigations in FY 2011 involved second requests. Second requests or requests for information and documentary material from the merging parties are made when the federal antitrust agencies are unable to make a determination on the competitive impact of a transaction based on the original HSR filings. The percentage of second requests jumped between FY 2010 and FY 2011, as well, with an increase of more than 40 percent (from 22 to 31). Eighteen of the 90 merger investigations were non-HSR matters.

The Antitrust Division’s FY 2002-FY 2011 workload statistics, which also show a significant increase in criminal cases filed and grand jury investigations initiated in FY 2011, are available at: http://www.justice.gov/atr/public/workload-statistics.html.

The FTC brought the case in 2009 against Solvay Pharmaceuticals and generic manufacturers Watson Pharmaceuticals, Par Pharmaceutical, and Paddock Laboratories over a “pay for delay” or “reverse payment” patent infringement settlement agreement related to patents for AndroGel—a testosterone replacement drug often used by men whose bodies do not produce normal levels of testosterone. In 2010, the federal district court in Atlanta dismissed the complaint (687 F. Supp. 2d 1371, ((CCH) 2010-1 Trade Cases ¶76,914) because the FTC failed to allege that the settlements, which included exclusion payments to the generic drug companies, exceeded the scope of the manufacturer’s patent on the drug as required by Eleventh Circuit precedent.

Under Eleventh Circuit precedent, “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” On appeal, the FTC unsuccessfully argued that the underlying patent had no exclusionary potential because the brand name drug company was “not likely to prevail” in the underlying infringement action against the generic drug companies, and therefore any reverse payment settlement that excluded competition from the market necessarily exceeded the potential exclusionary scope of the patent.

The FTC’s theory would require courts to decide what the likely outcome of settled patent infringement claims would have been. “The approach would require an after-the-fact calculation of how ‘likely’ a patent holder was to succeed in a settled lawsuit if it had not been settled,” according to the court.

The appellate court wanted to avoid “deciding a patent case within an antitrust case about the settlement of the patent case, a turducken task.”

“Retroactively predicting from a past perspective a future that never occurred” was “too perilous an enterprise to serve as a basis for antitrust,” in the court’s view.

The court was concerned that the approach would discourage patent litigation settlements and that predictions could be unreliable. The court also reasoned that the non-specialized circuit courts, as opposed to the U.S. Court of Appeals for the Federal Circuit, were “ill-quipped to make a judgment about the merits of a patent infringement claim.” Congress had given the Federal Circuit exclusive appellate jurisdiction over patent cases, and the FTC’s approach was in tension with Congress’ decision to have such appeals decided by that court.

The court also rejected the FTC’s “ominous forecast” if these types of agreements were to escape antitrust attack. If the patent were invalid, then another generic drug maker could come along and challenge it, according to the court. The brand name drug company might be willing to share monopoly profits with the first one or two generic challengers, but not likely more.

Other FTC Efforts to Combat Pay-for-Delay Settlements

FTC Chairman Jon Leibowitz has said that combatting anticompetitive pay-for-delay patent settlements in the pharmaceutical industry is a top priority for the agency. The Commission has supported efforts to pass proposed federal legislation; however, the bills introduced in Congress have failed to gain traction for years. A new measure (H.R. 3995) was introduced this past February.

While the FTC sees a legislative approach as a better fix, the agency continues to investigate these types of agreements and to challenge the agreements in court. The FTC has another “pay-for-delay” action pending against pharmaceutical manufacturer Cephalon, Inc. for allegedly restraining competition for its branded drug, Provigil, by paying four competing firms to refrain from selling generic versions of the drug. The federal district court in Philadelphia has denied the defendants’ motion to dismiss the allegations (702 F. Supp. 2d 514, (CCH) 2010-1 Trade Cases ¶76,950).

As the case is nearing the summary judgment phase, word is expected soon from the U.S. Court of Appeals in Philadelphia in another matter on the subject of pay-for-delay agreements. The agency has submitted an amicus brief in support of private class action plaintiffs who challenged the legality of patent settlements between branded and generic manufacturers of the high blood pressure medication K-Dur 20. The legality of pay-for-delay patent settlements is a question of first impression in the Third Circuit. The FTC’s brief urges the Third Circuit to reverse a decision of the federal district court in New Jersey granting summary judgment ((CCH) 2010-1 Trade Cases ¶76,949) in favor of the patent holder, Schering-Plough Corporation, and the alleged infringers–Upsher Smith and ESI.

The text of the April 25, 2012, decision in FTC v. Watson Pharmaceuticals, Inc., No. 10-12729, is available here.

Admittedly, the ABA Antitrust Section Spring Meeting, perhaps the profession’s preeminent event, is in some respects getting to be just a bit of a circus.  What were once a handful of calm, early evening cocktail receptions in the bowels of the Marriott have grown into a deafening barrage of extravagant drink-fests, which have spilled over into the many posh surrounding hotels and restaurants, including the Willard and that exclusive, trendy new home of $20 hamburgers, Central Michel Richard.  One venue on Thursday afternoon featured, in addition to the inability to hear, mini-sombrero party-favors and a mariachi band.  And as proof how much the Spring Meeting now resembles fraternity pledge week, walking outside the Marriott one was surrounded by quite a number of exceptionally well-dressed young men and women, oblivious both to the Occupy Wall Streeters camping on Freedom Plaza and to whatever might be the District’s open-container laws.  You could hear them saying things like “Dude, are you going to [XYZ law firm's] party?  You totally have to go to [XYZ's] party.”  And then there was the . . . well . . . there was the Teddy Roosevelt impersonator.  Put that in your pipe and smoke it.

Anyhoo, for those many of us who must follow antitrust from outside the Beltway, the Spring Meeting is also pretty priceless.  Here are a few points that especially stood out to one humble observer.

First there was the Annual Dinner address by Senator Al Franken.  Most remarkable to me was the depth and erudition of his remarks, which focused almost entirely on antitrust substance.  (In the audience there was a bit of grumbling—quite misplaced, I thought—that his remarks weren’t funny; it would hardly have befitted any U.S. Senator to come and perform stand-up, and all the less so in times of crisis in which many believe that matters of competition policy are of pressing concern.)  But here is the highlight, as far as I am concerned:  Well over half of the Senator’s lengthy remarks were devoted to the possibility of antitrust action against Google.

If this were just the random thoughts of some guy it would hardly amount to much.  But first, the Senator serves on the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, and second, it lends weight to one of the suspicions I found most fervently discussed in the Meeting’s hallways and anterooms:  that the FTC will proceed with its apparent intention to challenge Google’s alleged monopolistic conduct.

And so many other nice tidbits jumped out at me as matters to take notice of:

1. Rich Feinstein, Director of the FTC’s Bureau of Competition, was asked whether the agencies’ failure since 1984 to modify the Vertical Merger Guidelines can be taken as proof that nothing has changed in their approach to analyzing vertical acquisitions.  Though saying he doubted the Guidelines would be revised any time soon, he said this:  “Let me put it this way.  It’s been a pretty long time since I’ve read those Guidelines.”  (Commission chief economist Joe Farrell agreed that market share—the primary consideration under the 1984 Guidelines—is no longer very important.)

2. An entire panel was devoted to what many of us may not really have known much about—that there is a major wave of health care mergers.  Entitled “Merger Mania:  Health Care Reform’s Impact on Markets,” the panel was billed this way:  “Health care reform has had a profound impact on the business activities of many health care providers. With a proliferation of mergers between hospitals and other health care providers, what role will State Attorneys General play in ensuring competitive markets while also protecting the public interest?”  Seems to me a major component of what is going on has also been a more or less concerted effort to secure as much antitrust immunity as possible for these maneuvers; witness the Phoebe-Putney case and the fairly likely consideration of it by the Supreme court.  (For more, see here.)

3. And in a speech nicely sprinkled with other erudite and careful insights, former FTC Chairman Kovacic speculated during the “Hot Topics” session that if any merger case is “in the pipeline” to break the Supreme Court’s near-40-year moratorium on merger cases, it might be the Commission’s recent decision in ProMedica. 

4. It was also just a bit arresting to hear Chairman Kovacic, less than a year after his return to academia and therefore free of the usual constraints of official decorum, waxing passionate in his denunciation of “the astonishing selfishness” of one member of Congress” who has proposed to turn the Commission’s building into an art museum.

According to the appellate court, the lower court misapplied the plausibility standards set by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129S. Ct.1937 (2009). The lower court should not have dismissed plausible allegations of a boycott, merely because it found a different version of events more plausible. By finding the plaintiff’s view of the events implausible, or less plausible than the possibility that the defendants acted unilaterally, the lower court improperly made factual findings, it was held.

Prior to being forced into bankruptcy liquidation, Anderson News was the second largest magazine wholesaler in the United States. After ceasing operations in 2009, Anderson brought an antitrust action against five national magazine publishers and their four distribution representatives, as well two smaller wholesalers. Anderson alleged that, along with the country’s largest magazine wholesaler—Source Interlink Distribution, LLC—it was the target of a boycott conspiracy.

Anderson contended that the boycott to eliminate the nation’s two largest magazine wholesalers followed a move by Anderson to impose a surcharge on publishers for each magazine copy it distributed, regardless of whether the copy was sold by a retailer. The surcharge was an attempt to recover costs associated with retrieving unsold magazine copies from retailers and deposing of them. Shortly after Anderson announced the surcharge, Source announced that it too would impose a similar surcharge.

The defendants, in an effort to get Anderson to drop the surcharge, allegedly invited the wholesaler to join in the elimination of Source. Anderson contended that it declined. According to Anderson, thereafter, the defendants met or communicated with each other and agreed to reject Anderson’s proposed surcharge, to refuse any other accommodation, and to stop supplying Anderson with magazines.

Anderson’s allegations of conspiracy were plausible, in the appellate court’s view. The appellate court explained what differentiated the complaint filed by Anderson from the complaint at issue in Twombly.

Anderson alleged an actual agreement to eliminate Anderson and/or Source as wholesalers in the market and to divide the market between two smaller wholesalers. According to the appellate court, “the facts alleged in the [proposed amended complaint] are sufficient to suggest that the cessation of shipments to Anderson resulted . . .  from a lattice-work of horizontal and vertical agreements to boycott Anderson.”

The appellate court went on to say that it had “difficulties with some of the court’s analytical constructs, including its application of Twombly‘s plausibility test.”  The lower court’s plausibility inquiry was “misdirected” when it ruled that Anderson did not state a plausible Sherman Act, Sec. 1 claim, simply because unilateral parallel conduct by the defendants was completely plausible. According to the appellate court, “although an innocuous interpretation of the defendants’ conduct may be plausible, that does not mean that the plaintiff’s allegation that that conduct was culpable is not also plausible.” Moreover, on a Rule 12(b)(6) motion it was “not the province of the court to dismiss the complaint on the basis of the court’s choice among plausible alternatives.”

The appellate court also rejected the lower court’s determinations that Anderson’s conspiracy claim was implausible because the defendants had “a variety of reactions” to Anderson’s announcement of the surcharge or because Anderson’s surcharge was a nonnegotiable demand on the publishers. There was nothing implausible about coconspirators’ starting out in disagreement as to how to deal conspiratorially with their common problem. Moreover, the presentation of a common economic offer might lend itself to independent, parallel responses, but it did not provide antitrust immunity to the publishers if they decided to get together to boycott the offeror.

One could chalk this decision, Anderson News, L.L.C. v. American Media, Inc., Docket No. 10-4591-cv, up to differing views of antitrust law held by three federal appellate court judges who were appointed by Democrat presidents and a federal district court judge appointed by President George W. Bush. However, the ruling shows that the hurdles imposed on antitrust plaintiffs by Twombly and Iqbal are not insurmountable. In this case, the plaintiff told a compelling story. Whether the plaintiff will be able to survive a defense motion for summary judgment remains to be seen.

Deploying that prowess for economic and legal analysis that may characterize many ophthalmologists, Senator Paul seems to believe the bill does no more than limit FTC jurisdiction (consider his comments to that effect to The Hill).

But that is quite wrong.  His so-named “Anti-Trust Freedom Act of 2012” would entirely repeal federal antitrust as to any conduct by “individuals.”  It provides in its entirety as follows:

The Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 U.S.C. 12 et seq.), and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) shall not be construed to prohibit, ban, or otherwise extend to any voluntary economic coordination, cooperation, agreement, or other association, compact, contract, or covenant entered into by or between any individual or group of individuals.

That gets pretty much all of it—all § 1 conduct, all transactions otherwise covered by Clayton § 7, and virtually all conceivable “exclusionary conduct” under Sherman § 2—so long as the defendants consist only of “individuals” or “group[s] of [them].” And plainly the limitation to “individuals” would be chaotic and unpredictable, and I think likely devastating. It would revisit the same absence of any antitrust theory of the firm that was at the heart of American Needle. In some sense any business firm is a “group of individuals,” and while most courts might hesitate to construe that term in a way that would eviscerate antitrust, some courts would not hesitate, and even those that would will find some cases quite ambiguous. Is not a sports league really just a “group of individuals,” for example?

It may very well be, as some press reports suggest, that Paul only has in mind protecting doctors groups and other coalitions of individual professionals or small businessmen. But I think as a practical matter, as to a very wide swath of economic activity, antitrust would be gone.

A small mystery is where this came from. Senator Paul’s evident confusion suggests he didn’t write it and perhaps has not read it. There are no co-sponsors, and there is no accompanying press release, floor statement, or evidence by whom or for whom it was written. My guess is that it comes from someone at Cato, as The Hill makes reference to an apparently non-public “description” of the bill issued by Paul’s office, which appears to quote from this Cato blog post. Of course, on a practical level this is essentially a stunt, since Chairmen Leahy and Kohl would give such a bill no committee time even if it weren’t introduced at the very tail end of a congressional term in a presidential election year. 

Why exactly do they do these things?

Anyway, one should hardly be surprised. Here’s some disquieting footage from 1983 of Senator Paul’s father, appearing alongside economist Dominick Armentano, the two of them saying such things as that there has never been an “effective” conspiracy of any kind, that many or most monopolies are desirable, and that antitrust constitutes an unconstitutional ex post facto law.  “A free market,” says Dr. Armentano, “is precisely that.  It is a market free of intervention.  And once you remove the regulation [i.e., antitrust], the market will be competitive.”  (See 10:30 – 11:10)  Representative Paul, though he appears never actually to have introduced an antitrust repealer, openly endorses repeal here.  (See 11:15+)

To wit, while no petition has yet been filed, the Solicitor General has confirmed that he will seek review in FTC v. Phoebe Putney Health System, Inc. (663 F.3d 1369, (CCH) 2011-2 Trade Cases ¶77,722). The precise issue would be whether the Eleventh Circuit properly found the Midcal requirement of “clear articulation” to be satisfied where a state does no more than empower a municipal entity to enter contracts or buy and sell property.  If the Court takes the case, it would likely clarify the “foreseeability” test for clear articulation first formulated by Justice Powell—something of a foe of antitrust enforcement—in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 42 (1985).  Handicapping the certioriari process is better left to the high court bar, but we mortals can at least hope the Court will perceive something like a circuit split here.  The Eleventh Circuit took a drastic view of what can constitute clear articulation, and it seems unlikely that many other circuits would go along with it.  It seems fair to say that a majority of the Court also dislikes antitrust enforcement rather less than they dislike pork barrel government giveaways.

The Phoebe Putney decision was strikingly, obviously wrong.  It immunized a grossly anticompetitive hospital merger even though the transaction was negotiated and executed almost exclusively by two private entities:  one private hospital proposed to buy another one, in a part of small-town southwestern Georgia where there is no other major hospital within quite a distance.  What is really remarkable was the transparent flimsiness of the parties’ effort to secure antitrust immunity, and their lack of effort to conceal it.

Under a statewide health care policy adopted in 1941, local governments in Georgia may establish “Hospital Authorities,” which are quasi-public non-profit entities that can own and operate health care facilities.  The acquiring hospital in Phoebe Putney had been owned by one such Authority for many years, but in 1990 the Authority all but handed it over to a purely private non-profit entity.  (The Authority continued nominally to own the hospital, but leased it to the non-profit, giving the non-profit full control, for an annual rent of one dollar).  To simplify, I will call that non-profit entity “Phoebe Putney.”  In 2010, after twenty years of free-standing operation with little evidence of government oversight, Phoebe Putney officials initiated an effort to buy their only serious competitor, a nearby for-profit owned by the national chain Hospital Corporation of America.  They reached a full agreement without even having notified the Authority, and their agreement included a massive break-up fee if the Authority failed to approve it in precisely the form they had negotiated.  The deal unapologetically required Phoebe Putney to take steps to secure antitrust immunity, but the steps identified were a pantomime.  The Authority would nominally be the purchaser of HCA’s hospital, but it would make the purchase with Phoebe Putney’s money, and it would instantaneously lease the HCA hospital to Phoebe Putney—again for $1 per year—under a “management agreement” giving Phoebe Putney full control.

One juicy tidbit is that Phoebe Putney was unable to secure an investment bank’s “fairness opinion” attesting that the high price it agreed to was justified.  There should not be much mystery why the price was high.

Projecting that the deal would result in a 100% share within the county and 86% within a larger, six-county region, the Commission sought what one might have thought was a slam-dunk § 13(b) injunction.  But the Middle District of Georgia dismissed at 12(b)(6) and the Eleventh Circuit affirmed. Neither court entertained doubt that the complaint alleged conduct that would be illegal on its substantive merits.  The Eleventh Circuit found the only question at 12(b)(6) to be state action immunity, and because prior circuit authority found Georgia’s Hospital Authorities to be “political subdivisions” under Town of Hallie, the defendant would be immune if it could meet the “clear articulation” element.

That’s where things went completely haywire.

The Eleventh Circuit’s substantive discussion begins with this assertion:  “The [Georgia] Hospital Authorities Law . . . contemplates anticompetitive effects,” as shown by the Authorities’ power to “operate” health care facilities, to “construct, reconstruct, improve, alter and repair” them, to “establish rates” charged in them, to “sue and be sued,” to “exchange [or] transfer” property, and to “borrow money . . . .”  663 F.3d at 1376.

To “sue and be sued”?  That’s relevant?  To “borrow money”?!?

It gets worse.  “Most important to [the] case,” the court wrote, was “the power to ‘acquire [health care facilities] by purchase, lease, or otherwise . . . .’ ”  To the court that power made clear that the “legislature . . . anticipated that such acquisitions would produce anticompetitive effects,” because “acquisitions could consolidate ownership, . . . eliminating competition . . . .”  663 F.3d at 1377.

This result is absurd.

Parker, Midcal and Town of Hallie establish a fundamental proposition of American political economy, of essentially constitutional scope:  competition is the presumptively preferred policy throughout the United States, and while state governments may deviate from that policy within their own borders, they can do so only if they comply with relatively demanding standards meant to assure that their deviations remain politically accountable.  That is, those deviations must either be sovereign acts of the states themselves, or comply with the Midcal and Town of Hallie standards.

Accordingly, local governments are “persons” that may be sued for antitrust violations, and they enjoy no protection from antitrust liability except where the state government has “clearly articulated” such protection (and except to the extent of the limited protection provided under the Local Government Antitrust Act (15 USC Secs. 35 – 37). When they act in a commercial capacity, they are required by federal law to compete, and they cannot avoid doing so unless the state, acting in its sovereign capacity, “clearly” says otherwise.  The Supreme Court has made clear in Community Communications Co., Inc. v. City of Boulder, 455 US 40 (1982), that even general grants of actual regulatory power, like home rule provisions, do not create a “foreseeable” enough likelihood of competitive restraint to clearly articulate a desire to restrain it.

So it seems unlikely that a state government repeals federal antitrust law every time it creates a municipal corporation that happens to have the power to buy stuff.

Phoebe Putney is a bad enough decision that it has already gotten a fair bit of attention. True to form, the indefatigable Professor Hovenkamp appears to have beaten everyone to the punch.  His recent SSRN postingMidcal element, “active state supervision.”  But any of them that could manage to characterize themselves as instruments of a local government might secure Town of Hallie immunity even without active supervision.)

My collaborator Peter Carstensen also has an excellent paper forthcoming in the Antitrust Bulletin, which will be available at 56 Antitrust Bull. 773 (2011), in which he studies the generally poor treatment of anticompetitive state rules.  He has some choice analysis of Phoebe Putney, and among other things he notes two rather remarkable facts for a case in which the state is said “clearly” to have chosen to displace competition:  (1) the state’s own Attorney General was the Commission’s co-plaintiff, and (2) the state’s constitution Ga. Const. Art. 3, section 6, paragraph 5] prohibits laws “authoriz[ing] any contract or agreement which may have the effect . . . of encouraging a monopoly . . . .”

Anyway, as a parting thought, one must simply love the local officials’ reaction to the Solicitor General’s decision to seek cert.  The chairman of the local Hospital Authority said:

“We are stunned and disturbed by this most recent development. . . .  The FTC continues to waste taxpayers’ money and our community’s money to challenge an already decided case, which has been confirmed by appeal.”

Really? What exactly do you suppose will happen to their money once the hospital has an 86% market share?

Update

And, as expected, the Solicitor General has filed a petition for certiorari from the Eleventh Circuit’s execrable December decision in FTC v. Phoebe Putney.  Also as expected: (1) the QPs center on whether the mere granting of general corporate powers to a municipal entity can constitute a “clear articulation,” because if that implicates a sufficiently “foreseeable” competitive restraint under Town of Hallie, then so does everything in the universe; and (2) the SG makes an elaborate case that the Eleventh Circuit has established what amounts to a circuit split—its finding of “clear articulation” from mere grant of corporate powers represents an “entrenched misapplication of th[e] [Supreme] Court’s precedents that squarely conflicts with decisions from the Fifth, Sixth, Ninth and Tenth Circuits.”  P. 11, 23-27.

When I first heard about this mess (in February of 2011, when the Commissioners wrote a similar letter), I had thought the story was really about competition policy and the politics of regulation.  Its apparent theme was poignant, bitter symbolism:  a hostile and radically conservative House majority, intent on protecting the plutocracy from any government interference at all, had resolved to send a message.  They would literally turn the Commission into a museum.

But as it drags on, it has come to seem quite different.  The story is not actually that Congress has unwholesome motives or even any motives at all.  The story is that Congress is completely broken.

A widely discussed opinion survey last year showed our Congress to be less popular among Americans than pornography, polygamy, British Petroleum during the Gulf oil spill, Richard Nixon at the peak of Watergate, and Communism.  Communism. King George III of England is reputed to have been twice as popular among Americans, during the American War of Independence, as their Congress is today.

Popular disgust surely reflects Congress’s massive failure to act.  The year 2011 was officially Congress’s least productive year in history (at least since productivity records were first kept in 1947), and it occurred during a period of multiple crises of international significance. But it also must reflect the foolish and trivial nature of many of the things our legislators do occasionally seem to accomplish.  Devoting their agendas to pet peeves, hobby horses, and small stunts apparently meant as campaign fodder now consumes a lot of their time, even as historic crises persist, and millions of average people suffer.

Of course, the FTC building effort could be spun as an austerity measure, meant to exploit beneficial “privatization” insofar as the Commission would rent privately owned quarters, and its proponents frequently so spin it. The handful of Republicans behind it argue that it would save at least $300 million, and they sometimes claim it would save as much as $540 million.  They lend their cost-reduction claims conservative authenticity by throwing in anti-government aspersions, as by saying that the Commissioners really oppose the plan only because “[i]t ruins [their] view of the Capitol.”

But the claim is so unlikely that one doubts it could be the real motive.  The non-partisan, competent, and well regarded Congressional Budget Office says that it will actually come at a net cost of $270 million, because the Commission must rent or build new quarters within the District and will incur costs in moving and outfitting a new building to meet its technological needs.  (Admittedly, some Republicans question CBO’s impartiality. But even if there were anything to their criticism, you can pretty safely bet on the following:  if CBO says something will cost hundreds of millions of dollars, and then a Congressman—and as we shall see, it turns out to be one lone Congressman on a decade long vendetta—says that it will save as much as a half billion, then it is actually going to cost something.)

The effort also appears to lack any clear constituency.  While the National Gallery of Art now supports the plan, it was not their idea and they were initially non-committal.

And indeed, no common sense motive seems to be at work.  This whole fiasco seems actually to be one House committee chairman’s obsessive and apparently quite personal campaign, and one that has gone on for upwards of 10 years.  Republican John Mica represents a low-population district on the northeastern coast of Florida.  He grew up in Miami, did community college and finished at the University of Florida, and then spent a few years in real estate before beginning well over three decades in politics.

He first introduced a bill to evict the Commission in 2005, and has reintroduced it many times (see, e.g., here, here and § 24(c) of a rather ominous bill incorporating it into a plan resembling one favored by the White House). He also appears to have pushed it with plenty of behind-the-scenes advocacy (see, e.g., this story and pp. 21-22 of this 2010 report).

Now, does “obsessive” seem like too strong a word?  Well, during a subcommittee meeting in March 2011, Chairman Mica said “I have no other priority for the balance of my tenure in Congress.”

Times were pretty bad just then.  Unemployment remained at nearly 9%. An alarming downward revision of economic growth estimates, along with persistent fears of European debt and increasing oil prices, put the still fragile recovery in jeopardy.

The news was full of stories of state and local budget crises so severe that the police could no longer enforce some laws. And yet Chairman Mica had no other priority than expanding an art museum.  As he seems rather fond of telling people, he is “a persistent [expletive].”

So it appears that a Republican from conservative small-town Florida wants to spend at least a hundred million or so on this project.  He wants to do it at a time when both parties are so intent on fiscal austerity that it seems not to matter that more American children live in poverty than at any time since records have been kept.

Why?

Well, it seems to be nothing more than that this one guy just really likes art.  A Mica staffer who has handled the effort for some years gave only this as an explanation:  “[Mica is] very much a fan of art in the [National Gallery] and just the arts in general.”

Mica himself feels free to tell reporters that he’s in it because art is his “weakness.”

“Some people drink, chase women, golf,” he told that reporter. “I like art, architecture, a few antiques . . . . Everybody has their own thing. And this is mine.”

He likes it, in other words, this one guy.

Meanwhile, what of the American consumer? What about that mass of average citizens who by wide, bi-partisan consensus benefit from consumer protection and antitrust enforcement?  People who, also by wide consensus, are in dire straits in part because of conduct that the Commission and other federal regulators could address?

Let them eat cake.

The people by whom we are governed have apparently all gone crazy.

And indeed, it was a rather arresting moment at this year’s Antitrust Section Spring Meeting when former Commissioner William Kovacic described Mica’s quest as “the astonishing selfishness of one Member of Congress.”

Senator Herb Kohl (D-Wisconsin) last month introduced two antitrust amendments to the long-stalled “Moving Ahead for Progress in the 21st Century America Fast Forward Financing Innovation Act of 2011” or “MAP-21” (S. 1813)—the two-year surface transportation bill. However, a compromise to move the legislation forward excludes the proposals.

Today, Senator Harry Reid (D-Nevada) announced that an agreement had been reached between Democrats and Republicans to advance MAP-21. Under the agreement, 30 amendments would come up for a vote. However, the antitrust amendments were not among them.

Railroad Antitrust Exemption

On February 14, Senator Kohl introduced Amendment 1591 to the transportation bill, which was identical to the proposed “Railroad Antitrust Enforcement Act of 2011” (S. 49). S. 49 was introduced on January 25, 2011, and was approved by the Judiciary Committee on March 28, 2011.

The measure would bring railroad mergers and acquisitions under the purview of the Clayton Act, allowing the federal government, state attorneys general, and private parties to file suit to enjoin anticompetitive mergers and acquisitions. Railroad mergers and acquisitions are currently reviewed by the Surface Transportation Board (STB). Moreover, the proposal would eliminate the exemption that prevents FTC scrutiny of railroad common carriers and the antitrust exemption for railroad collective ratemaking.

NOPEC

As gas prices spiked, Senator Kohl on February 28 introduced a second amendment to the transportation bill: the proposed “No Oil Producing & Exporting Cartels (NOPEC) Act.” The amendment tracked the language of S. 394, which was introduced on February 17, 2011, and passed the Senate Judiciary Committee on April 7, 2011. The proposal would permit the Justice Department to bring actions against foreign states—such as OPEC members—for collusive practices in setting the price or limiting the production of oil. The NOPEC amendment had bi-partisan support, according to Kohl.  

Both measures have been championed by Senator Kohl over the last few sessions of congress, but have failed to gain broad support. In fact, various versions of the NOPEC bill have been considered by Senate lawmakers for more than a decade.

With the exclusion of the antitrust amendments from the transportation bill, final passage of these proposals in the current congress is looking less and less likely. And with Kohl leaving the Senate at the end of his current term in January 2013, it is possible that the measures might need a new champion in the upper house of congress to become law.

The intersection between the Sherman Act and the Capper-Volstead exemption for collective conduct by agricultural industry members has given rise to a number of recent cases.  In re Fresh and Process Potatoes Antitrust Litig., No. 4:10–MD–2186 (D. Idaho) (“Potatoes”), is particularly noteworthy. There, the District Court held that the Capper-Volstead exemption does not reach pre-production farming activity, such as planting and harvesting, adopted to reduce the supply of potatoes – and hence, to increase the price at which the product is sold. Lacking any refuge in Capper-Volstead, such collective farming activity is fully subject to per se condemnation under the antitrust laws.

The Case Background

Suing in Idaho, the heart of the nation’s potato industry, potato purchasers challenged the supply “management” program adopted by the United Potato Growers of America (“UPGA”), an umbrella cooperative of potato growers, as a Sherman Act § 1 violation. Under the program, potato growers agreed: (1) to limit potato planting acreage; (2) to destroy existing stocks; and (3) to refrain from growing additional potatoes, thus constricting the supply of potatoes available for sale. The purchasers further alleged that this pre-production potato management program was designed to raise product prices, and as implemented had in fact achieved that goal. Thus, the purchasers argued, the UPGA and other named defendants engaged in unlawful price-fixing.

The UPGA moved to dismiss, arguing, in substance, that the Capper-Volstead Act permits an agricultural co-op to agree on product selling prices – that is, to fix prices – even though the Sherman Act would prohibit the agreement absent the statutory exemption. See, e.g., Maryland & Virginia Milk Producers Ass’n. v. United States, 362 U. S. 458, 465 (1960); Northern Cal. Supermarkets, Inc. v. Central Cal. Lettuce Producers Coop., 413 F. Supp. 984, 991-93 (N.D. Cal. 1976), aff’d, 580 F.2d 369 (9^th Cir. 1978), cert. denied, 439 U.S. 1090 (1979). Restricting supply, the co-op asserted, was simply an alternative means to establish potato selling prices. Outside of the Capper-Volstead setting, many a company has, of course, been held liable under the Sherman Act for conspiring to price-fix by agreeing to limit supply. But according to the UPGA, because the Capper-Volstead Act permits co-op price-fixing, the exemption also immunized the co-op’s pre-production supply management program.

The District Court rejected the co-op’s Capper-Volstead defense. Potatoes, No. 4:10–MD–2186, 2011 WL 6020859 [(CCH) 2011-2 Trade Cases ¶77,739] (D. Idaho Dec. 2, 2011).  The Court held that the Capper–Volstead Act does not apply to pre-production supply restrictions, but reaches, instead, only “acts done to an agricultural product after it has been planted and harvested.”  Id. at *6. The Court is spot-right. Congress passed the Capper-Volstead Act to give members of the agricultural community the right to collectively market their products. But neither the express language of the statute, nor the underlying congressional intent, extends to collective action restricting pre-production crop supply. The Sherman Act immunity is, therefore, limited.

The Capper-Volstead Act

The Capper-Volstead Act arose from economic conditions in the late 19^th and early 20^th centuries. Historically, large buyers of agricultural products bullied farmers into lowering product prices. Product buyers not only touted the availability of supply from other farmers, they also exploited the bargaining power inherent in unpredictable weather and growing seasons and the farmer’s increasing need (indeed, often-times desperation) to sell crops before they spoiled. Having low-balled the farmers for their products, the buyers and subsequent middlemen then price-gouged consumers for whom farm products were necessities of life. Although American farmer cooperatives were organized prior to the Civil War, it was not until shortly after 1900 that dairy farmer associations began to bargain collectively, with many commodity associations formed thereafter. See generally Christine A. Varney, The Capper-Volstead Act, Agricultural Cooperatives, and Antitrust Immunity, The Antitrust Source 1, 1-2 (Dec. 2010) (“Varney Article”); Report of the National Commission For the Review of Antitrust Laws and Procedures 254-55 (1979) (“1979 Commission Report”).

Like organized labor, however, farmer co-ops were early targets of antitrust litigation. Buyers sued co-ops that combined their harvests and that engaged in joint selling to increase their own bargaining power for conspiring to violate the antitrust laws. In response, States adopted what were called “marketing acts”  to allow farmers “to continue to produce singly, but . . . to emulate the efforts and practices of industrial corporations in processing, preparing for market and marketing farm products.” Milton J. Keegan, Power of Agricultural Cooperative Associations to Limit Production, 26 Mich. L. Rev. 648, 649 (1927-28). Congress itself authorized the creation of non-profit, non-stock agricultural co-ops when it passed the Clayton Act in 1914, but the provision’s limited scope quickly rendered it ineffective.

Congress therefore enacted the Capper-Volstead Act in 1922. Section 1 of the Act provides, in pertinent part, that:

Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes . . . .

7 U.S.C. § 291 (emphasis added).

Capper-Volstead’s Limited Antitrust Immunity 

By protecting co-ops from antitrust liability for collective marketing, Congress sought to enhance the bargaining power of co-ops in their struggle against “unnecessary middlemen,” who extracted “excessive profits” from both farmers and customers. See, e.g., 59 Cong. Rec. 7852. This state of affairs was “unfair to the consumer, because he had to pay too much for what he needs, and it is unfair to the farmer, because he receives too little in return for his investment of time and labor expended.” 59 Cong. Rec. 8022. Indeed, Senator Capper stated that, “for years evidence has been piling up to convince us that we have the most expensive marketing system in the world, also the most inefficient, if we except China . . . .”  62 Cong. Rec. 2060-61.  Thus, the Congressional debates emphasized the need to protect the farmer’s marketing activity as a means to deliver value down to end-user consumers. Senator Capper, along with others, believed that cooperatives would eliminate middlemen, streamline the marketing system, and provide farmers with access to a much broader market. See generally Maryland & Virginia Milk Producers, 362 U. S. at 464-68; Varney Article, The Antitrust Source at 5-6 (summarizing the legislative history).

The collective action that the Capper-Volstead Act permits is, accordingly, expressly limited to “processing, preparing for market, handling, and marketing.”  As the Potatoes court correctly recognized, this activity describes what happens after crops are “planted and harvested” – not before. 2011 WL 6020859, at *6.  Congress was quite clear in limiting antitrust immunity to collective post-production activity by farmers. There was no intent to insulate co-ops from all antitrust liability. The House Committee report on Capper-Volstead itself states that, “[i]n the event that associations authorized by this bill shall do anything forbidden by the Sherman Antitrust Act, they will be subject to the penalties imposed by that law.” H. R. Rep. No. 24, 67th Cong., 1st Sess., at 3 (1921).

Pre-Production Supply Restraints

The Supreme Court has recognized that the Capper-Volstead Act allows farmers to organize together, to set co-op policy, and, indeed, to establish or “fix” the prices at which the co-op will sell product – all without violating the antitrust laws.  See Maryland & Virginia Milk Producers, 362 U.S. at 465-66. But the courts have not recognized any Capper-Volstead authorization to immunize pre-production restraints on planting or harvesting. See Potatoes, 2011 WL 6020859, at *6 (distinguishing prior rulings that considered post-production restraints limiting the sale of product).

Federal enforcers have railed at the notion that Capper-Volstead protects supply restrictions from antitrust scrutiny. For example, in the early 1950s, the Antitrust Division filed two suits against co-ops that had adopted production restrictions, one of which resulted in a preliminary injunction and the other in a consent decree. Varney Article, The Antitrust Source at 6 n. 37. Stanley N. Barnes, then-Assistant Attorney General in charge of the Antitrust Division, stated unequivocally that co-op activity “to limit production” was among the activity that the Division regarded as illegal, regardless of Capper-Volstead. Address to the American Institute of Cooperation, Aug. 10, 1953, at 10, quoted in Note, Agricultural Cooperatives and the Antitrust Laws: Clayton, Capper-Volstead, and Common Sense, 44 Va. L. Rev. 63, 75 (1958); see generally Report of the Attorney General’s National Committee To Study the Antitrust Laws 325 n.231 (1955) (citing criminal cases in the 1940s).

The FTC has expressed the same position. Summarizing the Capper-Volstead debates, the Commission has noted that “Congress did not intend to allow farmers to use cooperatives as a vehicle by which they could effectively agree to limit production.” In the Matter of Central California Lettuce Producers Cooperative, 90 F.T.C. 18, 32 n. 20 (July 25, 1977). The FTC quoted Senator Capper:

But a farmers’ monopoly is impossible. If the cooperative marketing association makes its price too high, the result is inevitable self-destruction by overproduction in the following years. No other industry except agriculture has this automatic safeguard. With corporation activities the group producers, such as the United States Steel Corporation, can reduce the quantity of steel rails it will produce at any given time or completely close down its mills and reduce the supply.

 Id. (emphasis added).

In other words, under Capper-Volstead, co-ops can fix the price at which their products are sold “because if the price rises, farmers will produce more and consumers will not be overcharged. Individual freedom to produce more in times of high prices is a quintessential safeguard against Capper-Volstead abuse, which Congress recognized in enacting the statute.” Potatoes, 2011WL 6020859, at 8. The ability of individual farmers to control their own production thus operates as a natural check on the co-ops. But see Kenneth R. O’Rourke & Andrew Frackman, The Capper-Volstead Act Exemption and Supply Restraints in Agricultural Antitrust Actions, 19 J. of the Antitrust and Unfair Competition L. Section of the State Bar of Cal. 69, 83 (No. 2, Fall 2010) (critiquing Sen. Capper’s remarks).    

Equally important, control over the supply of agricultural products is itself the subject of a comprehensive federal statutory scheme – the Agricultural Marketing Agreement Act of 1937 (the “AMAA”), 7 U.S.C. §§ 601 et seq. – which the Secretary of Agriculture administers. Thus, as the FTC said in Central California Lettuce, while Capper-Volstead exempts price-fixing:

A different issue would be presented if it were alleged and proven that a cooperative had sought to limit production even among its own members, thus shutting off the safety valve against private abuse that ameliorates the adverse consumer impact of the Capper-Volstead exemption and circumventing the important procedural safeguards of the AMAA.

90 F.T.C. at 102 n.20.

Finally, although a co-op agreement on pre-production supply restraints is properly subject to the Sherman Act, a co-op’s bonafide gathering and distribution of product information should not, standing alone, subject the association to antitrust liability. See Potatoes, 2011 WL 6020859, at *8 (discussing Northern Cal. Supermarkets, 413 F. Supp. 984). Antitrust law does not condemn information exchanges, often a mission of trade associations, as per se unlawful. Agricultural co-ops covered by Capper-Volstead should not be treated differently. If, however, the information exchange is a mechanism to impose, implement, monitor or enforce pre-production supply restrictions, there would be no immunity. And, of course, non-per se antitrust scrutiny would apply in all events, as it does outside the Capper-Volstead context. See generally United States v. Container Corp. of Am., 393 U.S. 333 (1969); Todd v. Exxon Corp., 275 F. 3d 191 (2^nd Cir. 2001).

Capper-Volstead in the 21^st Century

Familiar principles counsel that exemptions from the antitrust laws are narrowly construed. Even putting to the side the statutory language and congressional intent, this canon of construction applies well to the Capper-Volstead Act today. The conditions that led to exempting co-op activity from the antitrust laws in 1922 – to allow small farmers to sell collectively as a counterweight to buyer power – are much-changed in the 21^st century, and have been for years. More than 30 years ago, a national antitrust commission observed “an accelerating trend toward concentration in agricultural marketing,” and noted that “the threat of monopoly by some cooperatives is now substantial.” 1979 Commission Report at 259.

Today, total agricultural co-op business was over $191 billion in 2008. Nat’l Council of Farmer Cooperatives, Cooperative Facts, available at http://www.ncfc.org/information/cooperative-facts. Huge agricultural co-ops, operating as vertically integrated enterprises, are commonplace.  “Agricultural producers not only plant, harvest and sell crops, but they or their cooperatives also pack and ship the crops.” Kenneth R. O’Rourke & Andrew Frackman, The Capper-Volstead Act Exemption and Supply Restraints in Agricultural Antitrust Actions, 19 J. of the Antitrust and Unfair Competition L. Section of the State Bar of Cal. 69, 71 (No. 2, Fall 2010).

For example, Land O’Lakes, the nation’s second largest co-op, had 2010 sales of more than $11 billion and earnings of over $178 million. Land O’Lakes, Annual Report at 2 (2010); National Consumer Cooperative Bank, 2011 NCB Co-Op 100 List, available at http://www.coop100.coop. Land O’Lakes not only markets milk and other dairy products, but also distributes “feed, seed, agronomy products and business and production services,” reaching all 50 states and 60 foreign countries.  Land O’Lakes, Inc., What Is a Co-op?, available at http://www.landolakesinc.com/company/coop/default.aspx.  The co-op consists of “approximately 9,000 employees, 3,200 direct producer-members and 1,000 member-cooperatives serving more than 300,000 agricultural producers.” Land O’Lakes, Inc., Welcome, available at http://www.landolakesinc.com/company/default.aspx. Land O’Lakes’ board consists of directors representing the co-op’s various dairy and “ag” regions. Directors are nominated by region, with director representation weighed according to business by co-op members within the particular region. Land O’Lakes, Goverance, available at http://www.landolakesinc.com/company/governance/default.aspx.

Ocean Spray, Sun-Maid, and Welch’s/National Grape are similarly large co-ops with integrated production, processing and marketing functions. These sorts of agri-businesses are a far cry from the co-ops that informed Capper-Volstead’s enactment. As the Potatoes case itself reflects, the buyer-power that today’s large co-ops can exercise is fairly a subject of concern. Stretching Capper-Volstead’s language to reach restraints on pre-production supply activity – collective conduct that has nothing to do with the reasons that Congress passed the law to begin with – hardly seems justified.

In 2010, the Antitrust Division and the Department of Agriculture hosted workshops around the country focused on competition in agricultural industries.   Whether this fact-finding activity will produce legislative change remains to be seen. This much is clear, however: whether the Capper-Volstead Act is still the right law for the state of the agricultural industry today is a question worth asking – and answering. Meanwhile, the Potatoes court correctly recognized that there is no sound basis for expanding the Act’s antitrust exemption to collective action restricting pre-production supplies under of guise of crop “management.”