USDA Issues Final Rule to Define Undue or Unreasonable Preferences or Advantages under the Packers and Stockyards Act

Thursday, December 10, 2020 - 8:00am
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WASHINGTON, Dec. 10, 2020 – The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) today issued a final rule to ensure fair trade and competitive marketing of livestock and poultry.

The rule clarifies the types of conduct prohibited by the Packers and Stockyards (P&S) Act and sets forth several criteria the Secretary of Agriculture will consider when determining whether conduct by packers, swine contractors or live poultry dealers represents an undue or unreasonable preference or advantage.

“The establishment of these criteria is representative of USDA’s commitment to equity in the livestock, meat and poultry industries,” said USDA Under Secretary for Marketing and Regulatory Programs Greg Ibach. “These criteria further clarify USDA’s enforcement mechanisms under the P&S Act that ultimately work to benefit everyone in the supply chain. We appreciate the significant public comments submitted to USDA that helped inform the development of this final rule.”

The four criteria include whether the preference or advantage:

  • cannot be justified on the basis of a cost savings related to dealing with different producers, sellers, or growers;
  • cannot be justified on the basis of meeting a competitor’s prices;
  • cannot be justified on the basis of meeting other terms offered by a competitor; and
  • cannot be justified as a reasonable business decision.

The final rule provides the Secretary will consider these criteria and allows for additional criteria to be considered in determining if an undue or unreasonable preference or advantage has occurred and enforcement action should be taken.

The rule will be published in the Federal Register and is effective as of January 11, 2021.


The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) required USDA to publish criteria the Secretary will consider in determining whether an undue or unreasonable preference or advantage has occurred in violation of the Packers & Stockyards Act.

The final rule does not address the long-settled issue of defining “competitive harm.” Eight circuit courts of appeals have ruled that demonstration of harm to competition is a necessary condition for finding a violation under Section 202 of the P&S Act. USDA will continue to evaluate harm to competition on a case-by-case basis.

The Packers and Stockyards Act prohibits packers, swine contractors, or live poultry dealers from making or giving an undue or unreasonable preference or advantage to any person or locality. The Act provides USDA discretion in determining whether the conduct of regulated entities is considered a violation of the Act.


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