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News Every Day |

Senators Demand Answers on USDA Analyst’s Role in Clearing Way for Sugar Merger

Two Senators sent a letter to Department of Agriculture Secretary Tom Vilsack on Monday demanding answers on the role one of his agency’s analysts had in blocking the Biden administration’s bid to prevent a merger between two of the nation’s largest sugar producers, according to a copy of the letter obtained by TIME.

Barbara Fesco, USDA’s top sugar industry analyst, argued in September against the Department of Justice’s case against allowing U.S. Sugar to buy its rival Imperial Sugar. The administration argued that the merger would lead to higher prices for millions of American consumers as an already concentrated market underwent further consolidation, leaving just two companies in control of roughly 75% of all sugar sales in the southeastern United States.
[time-brightcove not-tgx=”true”]

Fesco’s assessment, she told U.S. District Judge Maryellen Norieka, was based on her relationships with executives at the companies involved, who had assured her they had no plans to raise prices. “Knowing these people as long as I have,” she said, according to a transcript of her testimony, “I had high faith that it was good.”

That testimony, which she told the court she was making in her “personal capacity,” seemed to have an impact. The judge cited it prominently in her ruling against the Justice Department, thereby allowing the $315 million merger to go through.

“It appears that a senior USDA employee, testifying as an expert on behalf of the sugar industry, may have persuaded a judge to greenlight a corporate merger that is likely to increase sugar prices,” wrote Democratic Senators Elizabeth Warren of Massachusetts and Cory Booker of New Jersey, in a letter citing TIME’s reporting on Fesco’s testimony. “This activity raises numerous ethics concerns and is particularly troubling at a time when major grocery chains have already been leveraging their market power to raise prices and increase their own profits at the expense of American families.”

Read more: How a USDA Analyst Helped Stymie the Biden Administration’s Bid to Block a Sugar Merger

The Justice Department has appealed the District Court’s ruling. Neither USDA nor Fesco responded to requests for comment on Monday.

The Senators told Vilsack that Fesco’s testimony violated the spirit, if not the letter, of President Joe Biden’s sweeping executing order in July 2021 directing the entire government to work toward cracking down on consolidated markets and increasing competition. The order put a large onus on Vilsack to rein in Big Ag, in large part by updating the rules of a 1921 law to protect farmers and consumers from anti-competitive forms of exploitation.

“This contradicts President Biden’s recent executive order on competition and calls into question whether USDA’s employees are working to serve the American people or wealthy corporate interests,” the Senators wrote. And they asked the secretary to answer a series of questions by Nov. 28 about how Fesco became a key witness against the government under which she serves.

The lawmakers specifically want clarity on whether anyone from the USDA approved Fesco’s testimony, if she had ever testified in her “personal capacity” in any other cases, and whether she received any compensation for serving as an expert witness in the sugar case—as expert witnesses are routinely paid for their testimony.

They also want details on USDA’s conflict-of-interest protocols and whether any other of the agency’s employees had testified against antitrust actions from the Department of Justice or the Federal Trade Commission since 2010. The Senators asked Vilsack to commit to barring the agency’s employees from testifying against either DOJ or the FTC in antitrust cases going forward.

“This testimony by a USDA employee against DOJ represented a grave conflict of interest, and raises a number of ethics questions about Dr. Fecso’s behavior,” the letter says, adding that it was “unclear that Dr. Fecso’s claims that she acted in her personal capacity are at all meaningful. She is a senior employee at USDA and was identified as such during her testimony.”

Unless they are testifying on behalf of the United States, a federal employee is prohibited from serving as an expert witness without authorization from the respective agency. In the sugar merger case, the Department of Justice didn’t object to Fesco testifying for U.S. Sugar because she was presented as a fact witness, meaning she was called to simply verify facts, according to sources familiar with the matter. But when the judge ruled in favor of the merger, she cited Fesco as an expert.

“She’s clearly representing the interests of the sugar company,” Virginia Canter, chief ethics counsel for the nonprofit Citizens for Responsibility and Ethics in Washington (CREW) and a former lawyer in the Obama and Clinton White Houses.

“I mean, it’s pretty significant. She couldn’t have a more direct conflict of interest.”

The episode with Big Sugar exposed the headwinds the Biden administration’s faces in its efforts to strengthen America’s antitrust enforcement regime. While conservatives argue that the Biden agenda is trying to undo decades of business-friendly rulings with a new approach to oversight, antitrust advocates say that Biden’s regulatory enforcement officials are up against a hostile judiciary and what government scholars call “regulatory capture,” when regulators act in the interests of the entities they are supposed to be overseeing.

“It is extremely disappointing to see a member of the administration undermine the enforcement work of another agency and the broader goals of this government,” an administration official who requested anonymity because they were not authorized to speak on the matter told TIME in September.

Multiple sources noted the unusual nature of Fesco’s argument to the court, which was weighing whether the merger would violate the Clayton Antitrust Act. Not only did she testify against the government she works for, but she based her reasoning on her personal relationships with the companies’ executives and not quantifiable metrics. When asked if she had seen any data that supported her belief that the merger wouldn’t lead to higher sugar prices, Fesco said she had not.

“It is extremely unusual, in my experience, to have a government employee testify contrary to the policy of the government,” says Norm Eisen, an expert on government ethics who served as a special counsel in the Obama administration. “That’s why it’s legitimate to ask questions about whether and how this was approved, and whether or not any compensation was paid, and to understand the process that applied here.”

The idea that consolidation creates efficiencies that lead to lower prices is deeply entrenched in the minds of jurists and regulators throughout the federal government. Over the last five years, however, more and more scholars and elected officials have come to the conclusion that decades of America’s lax antitrust enforcement has had the opposite effect—higher prices, worse labor conditions, and dangerous levels of concentrated political power.

But not everybody has bought in. U.S. Sugar, for its part, celebrated the court’s September ruling, releasing a statement at the time that said the merger would allow the company “to increase our sugar production … and benefit our employees as well as customers throughout the country.”

Both Warren and Booker were among the first members of Congress in recent years to sound the alarm about the growing level of monopoly power in America. Today, they have more allies on Capitol Hill, and a Biden administration staffed by anti-monopoly scholars, including Big Tech antagonists Lina Khan as chair of the FTC and Jonathan Kanter as head of the DOJ’s Antitrust Division. But they still face formidable adversaries both inside and outside of government.

Antitrust advocates like Phillip Longman, policy director for the anti-monopoly think tank Open Markets Institute, tell TIME that the sugar merger case is a sign of the urgency of the Biden administration’s antitrust agenda. “This underscores why we need effective antitrust policy,” he says, “to ensure that monopolies do not grow to such a scale that they dominate our government in its every corner.”









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