The sneaky way Facebook reportedly got its $400 million Giphy acquisition under regulatory radar is completely legal, experts say

Mark Zuckerberg, Facebook
Facebook CEO Mark Zuckerberg in New York City on Friday, Oct. 25, 2019.

  • Giphy paid dividends to shareholders before Facebook bought it in 2020, Bloomberg reported.
  • That lowered the value of Giphy’s assets, exempting it from telling officials of the deal before it closed.
  • Experts say the move was completely legal at the time, and it highlights potential holes in antitrust laws.
  • See more stories on Insider’s business page.

US authorities continue to train their watchful eyes on Facebook over anticompetitive concerns, and more details just surfaced about its mid-2020 acquisition of gif creator Giphy.

Sources told Bloomberg Monday that Giphy paid dividends to investors before Facebook bought it, lowering the value of its assets and helping the deal fly under regulatory radar. Axios reported at the time a deal value of $400 million.

US law as of 2020 states that if a company’s assets are worth less than $18.8 million, then it and the acquirer don’t have to notify antitrust regulators about their deal. Facebook told Congress last year that it didn’t report its Giphy acquisition because it wasn’t required to.

Experts told Insider that it was categorically legal for Giphy to do what it reportedly did since the Federal Trade Commission didn’t consider dividend pay-outs to be a tactic to avoid filing ahead of a deal.

It’s something that appears across industries, not just in tech, said John Keplar, a Stanford professor who co-authored a research paper on the subject. Yet it shows how the tech industry, including Facebook and its controversial acquisitions of would-be competitors, can flourish with the current US regulatory framework.

Giphy’s reported dividend pay-outs could highlight “the resource constraints of antitrust regulators,” Keplar told Insider. “It seems plausible that there are just too many deals occurring in practice for them to keep up with,”

‘Stealth acquisitions’ versus merely ‘non-reportable deals?’

Bloomberg reported that thousands of acquisitions and mergers go unreported, with only 10% of about 22,000 being reviewed before closing between 2018 and 2019.

By capping the notification requirement, regulators are spared the tedious process of having to review each and every acquisition, especially small ones that are unlikely to pose anti-competitive problems, said Maureen Ohlhausen, a Republican former FTC commissioner who referred to them as “non-reportable deals,” in an interview with Insider.

Ohlhausen, who has been critical of government regulation, said pre-deal dividend pay-outs aren’t really a loophole, since it’s completely legal for companies to do – or at least was before September 2020.

“It’s not common, but it does happen,” said Ohlhausen, who was appointed to the FTC by former Presidents Barack Obama and Donald Trump.

Another former FTC employee, who served at the agency for more than a decade and described themselves as enforcement-oriented, similarly told Insider they wouldn’t call it common and doesn’t think Facebook and Giphy did anything to avoid scrutiny. However, they said “there is no acquisition that Facebook is going to do today that’s going to evade the radar of the enforcers,” given the attention that the tech world has drawn in recent years.

mark zuckerberg congress hearing
Facebook CEO Mark Zuckerberg on Capitol Hill in Washington, U.S., April 10, 2018.

But on the other hand, there are concerns that companies can exploit the rule and structure their transactions to avoid seeking the green light from antitrust officials, who could pull the plug if they smell something amiss.

Kepler co-wrote a July paper titled “Stealth Acquisitions and Product Market Competition.” It found a large number of acquisitions whose deal amounts land right below the required notification threshold.

Their findings “suggest that firms can successfully manipulate M&A deals to avoid antitrust scrutiny, thereby leading to anticompetitive behavior.”

Keplar said that companies have “plenty of reasons” for paying dividends to shareholders, but “the question of whether it’s legal to do so to avoid filing for antitrust is a bit trickier.”

The Giphy deal reportedly prompted the FTC to change its rules

In 2003, the FTC created a rule that special dividends are never defined as a means to avoid telling regulators of a deal. But the agency tweaked those guidelines in September 2020, and now, managing the size of a deal to avoid filing can be considered an avoidance device.

A source told Bloomberg that the FTC changed the rule because of the Giphy deal earlier that year.

Facebook and Giphy did not respond to requests for comment.

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Google infringed on five patents, a judge says, marking a legal win for Sonos

Google Home on a table next to a Google phone
Products like Google Home and Pixel smartphones could be banned from import if the preliminary ruling is upheld.

  • Google infringed on five patents owned by Sonos, according to a preliminary ruling by a trade judge.
  • Sonos first sued the Big Tech giant in January 2020.
  • If the ruling is upheld, some of Google’s products could be banned from import.
  • See more stories on Insider’s business page.

Sonos scored a win in a patent battle with Google on Friday, when a US trade judge said that Google infringed on five of Sonos’ patents.

The preliminary ruling from judge Charles Bullock of the US International Trade Commission could deal a significant blow to Google. Some of its products, like its Pixel smartphones and Nest speakers, could be banned from import.

Sonos first sued Google in California federal court and with the commission in January 2020. The audio manufacturer alleged that Google infringed on its patents related to home speaker technology.

In addition to seeking financial damages in federal court, Sonos asked the commission, which is tasked with investigating unfair trade practices that harm US businesses, to ban imports of Google products that are made in China.

Google not only denied the claims – the tech giant also lodged a countersuit, arguing that Sonos was actually infringing on Google’s patents. In September last year, Sonos filed another lawsuit against Google, adding five more patents to the list of alleged infringements.

The patent dispute between Sonos and Google is unfolding at a time when Big Tech companies are under heightened scrutiny by lawmakers for anti-competitive behavior.

“This decision re-affirms the strength and breadth of our portfolio, marking a promising milestone in our long-term pursuit to defend our innovation against misappropriation by Big Tech monopolies,” Eddie Lazarus, Sonos’ chief legal officer, said in a statement.

The case isn’t over yet. The trade commission will review Judge Bullock’s decision for a final ruling, which is scheduled to take place on December 13.

“We disagree with this preliminary ruling and will continue to make our case in the upcoming review process,” José Castañeda, a Google spokesperson, said in a statement.

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Elizabeth Warren laid into Amazon and Facebook for trying to sideline new FTC chair Lina Khan. Both companies ‘fear’ Khan’s antitrust expertise, she said.

EW   Photo by Tom Williams Pool:Getty Images
Democratic Senator Elizabeth Warren has proposed introducing a wealth tax.

  • Elizabeth Warren attacked Facebook and Amazon over their objections to FTC chair Lina Khan.
  • Both companies tried to get Khan recused from antitrust cases involving them, claiming she’s biased.
  • Warren said the companies’ concerns were motivated by fear of Khan’s expertise.
  • See more stories on Insider’s business page.

Elizabeth Warren attacked Facebook and Amazon on Wednesday for trying to get new Federal Trade Commission (FTC) chair Lina Khan taken off any antitrust cases involving them.

The companies were trying to sideline Khan because they “fear” her expertise in antitrust law, Warren said in a letter to Facebook CEO Mark Zuckerberg and Amazon CEO Andy Jassy.

Warren was joined by Sens. Pramila Jayapal, Richard Blumenthal, and Cory Booker in a letter. The senators said Facebook and Amazon’s attempts to sideline Khan “only add to the perception that you are attempting to bully your regulators, disarm the FTC, and avoid accountability rather than to strengthen ethics standards.”

Khan, a Yale Law School graduate who published a paper entitled “Amazon’s antitrust paradox” in 2017, was nominated to the FTC on June 15. Later that month, Amazon filed a 25-page request to the FTC asking to have Khan removed from any judgement involving the company.

Facebook did the same in July, requesting that Khan be recused from an ongoing antitrust lawsuit filed against the company by the FTC.

Both companies said Khan has displayed bias against them in the past.

Read more: Read the complete NDAs Insider obtained in its investigation and see how Facebook, Google and Apple enforce silence among employees

“The real basis of your concerns appears to be that you fear Chair Khan’s expertise and interpretation of federal antitrust law,” the senators wrote.

“To argue that federal ethics laws preclude Chair Khan from exercising her expertise is illogical and inconsistent with the plain language of the relevant statutes and with FTC ethics officials’ interpretations of recusal requirements,” they added.

Warren wrote in a tweet that “Amazon and Facebook want to sideline @linakhanFTC to force an @FTC stalemate and evade accountability for their anti-competitive behavior.”

In the letter, the senators also asked the companies to disclose how many of their attorneys had worked at the FTC, the Department of Justice (DOJ), or for a state Attorney General, as well as how many of their lobbyists have worked in Congress.

Warren has attacked Big Tech before, claiming companies like Amazon and Facebook are anti-competitive. During her presidential candidacy run, Warren said she would like to break up the Big Tech companies including Amazon, Facebook, and Google.

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Warren Buffett’s next ‘elephant-sized’ acquisition may face antitrust risks after regulators tanked 2 megadeals this month

warren buffett
Warren Buffett.

  • Warren Buffett has been chasing an “elephant-sized” acquisition for years.
  • The investor has seen two huge deals collapse over regulatory concerns this month.
  • Buffett’s company scrapped a $1.7 billion pipeline purchase, while Aon shelved a $30 billion merger.
  • See more stories on Insider’s business page.

Warren Buffett has been hunting for his next “elephant-sized” acquisition for several years now. The famed investor and Berkshire Hathaway CEO may think twice about pulling the trigger after seeing two billion-dollar deals collapse this month.

Berkshire’s energy unit struck a $10 billion deal to buy Dominion Energy’s natural gas transmission and storage business last summer. After completing the bulk of the transaction in November, it scrapped its plan to buy the Questar Pipeline Group from Dominion for $1.7 billion earlier this month. It wasn’t clear whether the purchase would get antitrust clearance from the Federal Trade Commission, Dominion explained in a statement.

The two companies were right to question whether approval would be granted. “It is disappointing that the FTC had to expend significant resources to review this transaction when we previously filed suit in 1995 to block the same combination,” the agency said in a statement. “This is representative of the type of transaction that should not make it out of the boardroom.”

Buffett’s company suffered another blow when Aon terminated its $30 billion merger with Willis Towers Watson this week. Aon, a professional-services firm, was Berkshire’s sole addition to its stock portfolio in the first quarter of this year; it held 4.1 million shares worth $943 million at the end of March.

Like Dominion, Aon nixed its deal because of regulatory concerns, CEO Greg Case said in a statement. The company had hit a brick wall with the Justice Department, as officials didn’t buy Aon’s claim that a merger would accelerate innovation, or that Aon and Willis’ overlapping businesses operated in competitive markets.

There’s no way to know whether either transaction would have been cleared by the Trump administration. Yet it’s clear that the FTC’s new boss, Lisa Khan, is concerned about monopolies and willing to rein in and potentially break up some of the nation’s biggest companies.

Buffett is facing a combination of hefty price tags, fierce competition for acquisitions from private equity firms and SPACs, and tougher antitrust rules. Against that backdrop, the investor could be lugging around his elephant gun for a while yet.

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Warren Buffett reversed plans to buy a $1.3 billion pipeline to avoid antitrust scrutiny – and its shows how the rich and powerful see Washington’s growing regulatory threat

warren buffett
Warren Buffett in 2019.

  • Warren Buffett’s Berkshire Hathaway abandoned plans to buy a $1.3 billion natural gas pipeline.
  • Buffett’s energy company operates in states where the pipeline runs, which seller said the FTC could have used to block the deal.
  • The abandoned purchase signals that Buffett sees a growing federal regulatory threat.
  • See more stories on Insider’s business page.

Washington’s beefing up its antitrust regulatory muscle, and billionaire investor Warren Buffet is seemingly well aware of it.

The Berkshire Hathaway owner’s energy subsidiary said Monday it’s throwing out plans to buy a $1.3 billion natural gas pipeline that operates in 16 states, including Utah, Wyoming, and Colorado. Those are territories where his subsidiary’s energy company also runs, as CNN noted.

Berkshire Hathaway owning two pipelines that serve customers in the same states could have raised eyebrows from the Federal Trade Commission, which the company and the pipeline’s seller acknowledged in a Monday press release.

“The decision is a result of ongoing uncertainty associated with achieving clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,” Dominion, which was set to sell its Questar Pipelines to the company, said.

Dominion said it already sold gas transmission and storage assets to Berkshire in November, a deal that won’t be affected by the pipeline purchase termination and that was originally worth $4 billion, plus $5.7 billion that Berkshire Hathaway agreed to take on in debt.

Berkshire Hathaway Energy and Dominion declined to comment on this story.

Both Buffett and Dominion backing away from the pipeline deal shows that even the rich and powerful understand the regulatory threat currently posed by the US government – specifically from the FTC.

The agency is now helmed by Lina Khan, a big tech critic whose extensive antitrust law background has reshaped modern-day antitrust discussion. Khan, a Democrat, is joined by two other Democratic commissioners and two Republicans.

Apart from the FTC’s new make-up, lawmakers are also zeroing in on reshaping antitrust regulation in the US. Congress unveiled a package of five bills in June that are intended to keep big tech companies from becoming too large and powerful.

And just last week, President Joe Biden signed an executive order to combat corporate consolidation, or mergers, in the US economy, a move the administration said would increase healthy competition.

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Biden will sign an executive order cracking down on Big Tech firms buying up smaller companies and hoarding user data

President Biden
President Biden speaks to reporters on July 8

  • Joe Biden will sign a sweeping executive order on Friday, which includes a crackdown on Big Tech.
  • Biden’s order will tell agencies to scrutinize Big Tech mergers more closely.
  • It will also tell the FTC to draw up rules for how tech companies can gather and use consumer data.
  • See more stories on Insider’s business page.

President Joe Biden will on Friday sign an executive order cracking down on the power of Big Tech firms, as first reported by The New York Times.

The fact-sheet for the wide-ranging executive order focusing on “promoting competition in the American economy” was posted by the White House Friday morning. Technology makes up just one part of the order, which also targets sectors like the job market, healthcare, and transportation – but it takes specific aim at Big Tech platforms.

The order will, first, tell federal agencies to scrutinize mergers involving Big Tech firms more closely, especially when these firms try to buy smaller companies that could one day become their competitors.

Second, the order says Big Tech platforms are “gathering too much personal information,” and will instruct the Federal Trade Commission (FTC) to draw up rules and limitations on how Big Tech companies can hoover up consumer data.

The order also says Big Tech companies can use their troves of data to give themselves an advantage over smaller businesses, and asks the FTC to draw up rules “barring unfair methods of competition on internet marketplaces.”

On top of the orders specifically targeting Big Tech companies, Biden will also reportedly ask the Federal Communications Commission (FCC) to create new rules for broadband internet providers, and encourage the FCC to readopt net neutrality rules.

Big Tech companies including Facebook, Amazon, Apple, and Google are already under intense antitrust scrutiny in Washington.

In June, Congress introduced a series of bills directed at these four companies, and Biden appointed renowned Big Tech critic Lina Khan as head of the FTC, a move that prompted Amazon to ask that Khan be removed from any enforcement decisions involving the company.

Read more: Amazon is finally terrified of someone in Washington. That’s great news for America.

Facebook faces lawsuits for its acquisitions of Instagram and WhatsApp in 2012 and 2014 respectively. In December 2020, the FTC and 46 states filed two lawsuits seeking to break off Instagram and WhatsApp from Facebook. The lawsuits allege Facebook acquired the companies to stifle competition.

Facebook responded that the lawsuit was an attempt to revise history, and that the acquisitions had been cleared by agencies at the time. “We have operated and continue to operate in a highly competitive space. Our acquisitions have been good for competition, good for advertisers and good for people,” it said in a statement at the time.

Amazon has also been the target of criticism from lawmakers, who claim that it can use consumer data to get a competitive advantage over third-party sellers on its platform. Biden’s executive order specifically cites an October 2020 House Judiciary Committee report which alleged that Amazon used data from third-party sellers to develop its own competing products. Amazon has repeatedly denied this claim.

Google was hit with an antitrust suit from 36 attorneys general on Thursday over its control of the Android Play Store – six months after attorneys general filed a lawsuit claiming it abused its dominance in online ad sales. Google called the latest suit “meritless”, saying it was not about “helping the little guy.”

Apple is not the subject of any lawsuits from lawmakers, but pushed back against two of the five bills introduced by Congress in June, claiming they would damage the security of iPhones and, by extension, users’ privacy.

The New York Times reported CEO Tim Cook personally rang House Speaker Nancy Pelosi to lobby against the bills.

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Experts say it’ll take more than just breaking up Facebook to rein in Big Tech and protect your data

facebook mark zuckerberg
Facebook CEO Mark Zuckerberg in 2019.

  • If Facebook spun off Instagram and WhatsApp, it would still have all of your data.
  • Congress wants to force Facebook to share that data with other platforms to promote competition.
  • Experts say there needs to be a provision ensuring user rights are protected. Otherwise, expect “disaster.”
  • See more stories on Insider’s business page.

A potential forced break up of Facebook has been discussed for years, and that conversation has only been re-ignited as Congress mulls five new bills designed to rein in Big Tech.

But what would that implosion mean for the mountain of personal data Facebook has already collected on its hundreds of millions of users? According to experts, not much.

Two of the five bills introduced last month would force Facebook to share that data with competing apps and platforms, a feature known as interoperability.

Experts told Insider this can be a good thing. It’s how tech companies work together to make services useful for you – like how you’re able to sign in to apps using your Facebook or Google credentials or send an email from Gmail to a Yahoo address. The practice encourages people to use multiple platforms, instead of getting siloed into one specific ecosystem.

The idea is to foster healthy online competition since tech giants would relinquish their dominant grip on hordes of data and would instead share them with rivals. That proposal also stipulates that Facebook share data with Instagram and WhatsApp if it did spin off the subsidiaries.

Herbert Hovenkamp, an antitrust law expert and professor at the University of Pennsylvania’s Wharton School of Business, told Insider it could be similar to when the Bell System telephone giant was broken up in 1984: all seven of the Bell branches still had access to certain information to maintain optimal operability.

But experts said simply forcing Facebook to divest its acquisitions wouldn’t mean better safeguarding user data.

Hovenkamp said that “a spinoff wouldn’t automatically take any data way” since who has what information has nothing to do with a potential breakup.

And it wouldn’t change how Facebook conducts its data-sharing business. Facebook can enter into a B2B “data-sharing agreement providing them with the exact same data they held prior to the spinout,” Tim Derdenger, an associate professor of marketing and strategy at Carnegie Mellon, told Insider.

Instead, the experts said there would need to be some sort of provision included in the divestiture order to make sure that user data had adequate safety guards.

Otherwise, a plain and simple break-up could mean Facebook sharing your personal information with more entities to comply with interoperability requirements that are laid out in the proposed legislation.

“You’d need to have a mechanism so people could opt-out of sharing or specify what they do or don’t want shared,” Hovenkamp said.

Without that mechanism, user data would be shared more broadly – not exactly protected – in the name of healthy market competition.

“If there is no provision, it could be a disaster,” Hovenkamp said.

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Amazon really doesn’t like the FTC’s new chair

Lina Khan during a Senate meeting in April 2021.
Lina Khan during a Senate meeting in April 2021.

  • Amazon is not a fan of Lina Khan, a vocal big tech critic who now leads the FTC.
  • The company filed a request to have her removed from any enforcement decisions involving Amazon.
  • In 2017, Khan wrote a widely-read paper about how Amazon has escaped antitrust scrutiny.
  • See more stories on Insider’s business page.

Amazon really doesn’t like the Federal Trade Commission’s new leader.

The company on Wednesday filed a 25-page request to the FTC to have Lina Khan removed from any enforcement decision involving Amazon. That would include the FTC’s current review of Amazon’s $8.45 billion acquisition of MGM, as well as an antitrust investigation into the company that is already in process.

Amazon says there’s a conflict of interest because Khan has been publicly critical of large tech companies, especially Amazon, in the past.

“Given her long track record of detailed pronouncements about Amazon, and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind,” Amazon said in the filing, which was published by Axios and also reported by Bloomberg and the Wall Street Journal.

An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.

Khan gained notoriety in the tech and antitrust law worlds after she wrote a paper in 2017 titled “Amazon’s Antitrust Paradox.” She said the current antitrust framework is outdated, which enabled the company to evade antitrust scrutiny, despite growing rapidly and using predatory pricing.

She also made the argument in the paper for what it will look like if Amazon were to be broken up.

Amazon also said Khan is biased because she helped the House investigate Amazon and other big tech firms over online competition. After lawmakers conducted the months-long probe, they released a report calling tech companies “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

President Joe Biden appointed the 32-year-old Big Tech critic to the post earlier this month, and antitrust reformers rejoiced that a vocal anti-monopoly advocate would be helming the agency.

Many dubbed Khan “Big Tech’s biggest nightmare” as the industry, which long operated with little regulatory oversight, may soon be put in its place

Amazon did not immediately respond to a request for comment.

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Facebook is now worth $1 trillion after a US court’s dismissal of 2 antitrust lawsuits spurs jump in stock

Facebook CEO Mark Zuckerberg Testifies Before The House Financial Services Committee
Facebook CEO, Mark Zuckerberg.

  • Facebook hit a $1 trillion valuation for the first time on Monday after an antitrust court victory.
  • A US judge dismissed two lawsuits lodged against Facebook by the FTC and state attorneys general.
  • The social-media giant is the youngest of five US companies to reach the trillion-dollar milestone.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Facebook leapt into the $1 trillion territory on Monday after an antitrust court victory helped its stock reach that valuation for the first time, making it the fifth US company to achieve the milestone.

The social-media giant’s stock closed 4.2% higher on Monday at $355.64 per share, after a US federal judge dismissed two complaints filed against the company in December by the Federal Trade Commission and a group of state attorneys general.

The ensuing rally lifted Facebook into the trillion-dollar club as markets gave the court win a huge “like,” and boosted the rest of the tech sector, said Jeffrey Halley, a senior market analyst at OANDA.

US District Judge James Boasberg in Washington ruled that the FTC failed to support its claims that Facebook held monopoly power as it controls more than 60% of the social-networking market. However, the antitrust and consumer protection agency has 30 days to refile its complaint and try again.

Social networking “services are free to use, and the exact metes and bounds of what even constitutes a [social networking] service – i.e., which features of a company’s mobile app or website are included in that definition and which are excluded – are hardly crystal clear,” Boasberg said in the ruling dismissing the FTC’s complaint.

“The FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward,” he added.

The judge separately dismissed a lawsuit brought by 46 states challenging Facebook’s purchase of Instagram and WhatsApp, on grounds that they waited too long to put forward their claims. The states’ attorneys general argued that Facebook had acquired those companies to stifle competition from emerging social-media rivals.

Facebook, co-founded by Mark Zuckerberg in 2004, is the youngest of five US companies to hit the $1 trillion milestone, after just 17 years of existence. The Menlo Park, California-based company’s all-time-high market valuation sees it join other tech leaders Apple, Microsoft, Amazon, and Google parent Alphabet in reaching the 13-digit mark.

Facebook’s stock has added more than $592 billion in value since it hit a March 2020 market-cap low of about $416 billion. Its gains have been aided by people increasingly relying on its platform for staying in touch with friends, family, and businesses during the COVID-19 pandemic.

Read More: BANK OF AMERICA: Buy these 7 stocks to capture the investing frenzy as ETF inflows are on track for a record-breaking year

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Cattle markets have been upended, and big meat producers are making 20 times normal margins as beef prices soar

cows beef cattle

Soaring beef prices are making big meatpackers fat and happy while smaller players are left cleaning up the scraps, according to a New York Times story published this week.

As restaurants have reopened and with America’s grilling season underway, demand has upended cattle markets. Futures contracts on ready-for-slaughter cattle have shot up 6.6% year-to-date and 27.7% in the last year. Wholesale beef prices are up 40% since March.

Meanwhile, meat-eaters are already paying 5% more for ground beef and 9% for steaks year-on-year, according to NielsenIQ data cited by the Times.

Elevated demand is bringing on new supply. Second-quarter beef production and beef-cow slaughter rates are up year-on-year, 1.6% and 10% respectively, according to a RaboResearch report. That has partially been driven by drought conditions on the west coast, which have encouraged farmers to cull cows early.

Sizzling demand isn’t the only factor at play, though. Grocers, smaller ranchers, and some members of Congress are alleging that the four biggest meatpacking companies – three of which are US-based – have colluded to tamp down the beef supply, keeping prices artificially high.

Fat margins are breeding suspicion. Cargill, a meat processor and America’s largest private company, is making as much as 20 times normal profit margins per cattle head, according to RaboResearch. Even compared to past periods of pricey beef, Cargill’s margins are still elevated by a factor of six.

One Montana-based small-time rancher told the Times he hasn’t turned a profit in four years – and he blames the big meatpackers. He, like other critics, believes beef supply is being manipulated, likely as a result of non-transparent practices and consolidation in the meat-processing industry.

Antitrust pressure is growing, including from a DOJ probe of the meatpackers’ potential anticompetitive practices. The “big four” processors – which collectively control 80% of the industry – were subpoenaed in the investigation last year, and this May, a bipartisan group of senators encouraged the DOJ to redouble its efforts.

The big four have shown some signs of investing in supply expansion. US-based National Beef is expanding an Iowa-based plant and Brazil’s JBS is investing hundreds of millions in higher wages and more robust facilities, per the Times report.

“We believe our investments in increasing capacity and offering industry-leading wages to attract workers will lead to more opportunities for producers and benefits to consumers,” a spokesman for JBS told the Times.

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