Attorney General Eliot Spitzer

State of New York

(Editor’s note: New York State Attorney General Eliot Spitzer’s speech was a highlight of the April 1 conference on dairy industry market power in Syracuse, NY. Spitzer said his office is “deeply concerned” about consolidation in the Northeast dairy market, and promised to monitor and possibly address the situation. Below is a partial transcript of Spitzer’s speech.)

We are at the early stages in my office of looking at the issues you are going to be discussing here today. I am not here today to announce that we have concluded anything or that we are on the cusp of doing anything that will remedy the enormous problems you are very accurately describing, and defining and articulating.

We are deeply concerned by the issues you are raising and we have here Dick Grim ... the point person for all of the hard questions as the day goes on. Dick … is in the antitrust bureau, which is at the epicenter of the concerns you are articulating, and he is the one who will be digging in, with many of us in the office, into many of the issues you are raising about concentration in the market place. And what, if anything can be done about it, to assure that the market place is fair…

Now let me step back for a moment … referring to … the Wall Street cases we have made, which, for better or worse, have gotten most of the ink. The office has developed a reputation for becoming somewhat aggressive when it comes to maintaining, insuring transparency in the market place. There’s a reason for that. Markets do not work, and do not succeed in providing consumers with a good price and a fair price, or providing to producers, whether you’re General Motors or a small family farmer, a fair price, unless the rules of competition are maintained.

The rules of competition are maintained by aggressive and fair enforcement of the antitrust rules, Securities rules, and all of the other laws that have been created to make sure the market works. And that’s what we believe. That’s what we’re going to do, and that would be what will guide us in our investigation that we’re going to continue, that there’s absolutely no hesitation in this office to look at questions, or fear of offending important people. I think that’s eminently clear. So we will take … these investigations, based on the facts you raised for us, wherever they happen to go.…

There are legal principles here that are not necessarily easy for us to operate around or within. And the statutes have been created for good purposes, I believe, even if they haven’t played out the way people want to for good purposes. But these statutes have created a legal environment in which we don’t have a free hand at looking at all the issues that affect small farmers, or looking at an environment in which larger and larger entities, which are supposedly representing you—or with which you are negotiating, and therefore you feel you are not getting what is fairly due to you.

We know, as anyone who has paid the least attention to this industry knows, that the dynamic over the last many years has been hurtful to the producers of milk. It’s been hurtful to family farmers. The price you’ve been receiving has been going down, almost regardless of what the retail price has been doing. It is most painful to you to see a retail price increasing as you see what you are receiving going down.

I think you feel at that point doubly injured, as the retail customer, who is paying more, feels that, “Wait a minute. I’m paying more, therefore the farmers must be doing better. The person who is really working hard must be doing better if I’m paying more at the retail level.” And so when, that is not the case, and when all the intermediaries between you and that final retail customer, are scraping off a larger and larger share of that profit, of that net, you feel that you’re being taken advantage of. And we understand that. We agree with you, and we understand the dynamic in and within the market place. We also know the historical use of milk has been dropping here domestically, that has been enormously problematic. And therefore that has been an added layer of difficulty from your perspective....

Here is the request I would make of you ….

We need from you information, we need ... in the context of … Parmalat and what may happen in the prospective sale of Parmalat assets, we are going to be very, very attentive to any acquisitions that that occur that might have a market impact. I don’t mean to prejudge any situation, we can’t do that. And we don’t know yet who is going to acquire what, if anybody, but should there be divestitures, acquisitions that are authorized by the bankruptcy courts or others that raise market concerns, we obviously will take a very hard look at those issues to make sure the resolution does not have an improper market impact that will be injurious to you guys, so we are going to do that.

But what the request is I have of you is that you keep us informed, that you not bring us into a problem when it is perhaps too late to remedy it, but that you begin to talk to us right now about the issues you see, whether it’s the cooperatives, whether it’s the producers, the processors, or anybody else. Let us know where the problems are and give us the numbers that permit us to make the cases. These cases have to be based upon rigorous economic analysis, a lot of data. Antirust law … requires precision, care, and a lot of time and a lot of hard work. So we need your help, if you are seeking, as you know you are our assistance, and rightly so, and making cases because you think there has not been a fair opportunity for your product and for you to negotiate fairly with the cooperatives, with the processors. You’ve got to give us the opportunity to make the case for you by giving us the data, by letting us know what’s going on and sharing that information with us.

If you do that, then we will be able to do great things and we will be able to help you.

My pledge to you is that we will put that effort in. I can’t guarantee a result, I can’t promise you that we’ll make cases. What I can promise you that we care and we will work as hard on this issue as we have on any other case, whether it’s an environmental case, whether it’s the Wall Street cases … we will put our heart and soul into this with the same energy and dedication. So please, share information with us. We will do our best, and I look forward to doing business with you.