The Agricultural Exemption in Antitrust Law: A Comparative Look at the Political Economy of Market Regulation
42 Pages Posted: 15 Nov 2006 Last revised: 23 Dec 2007
Date Written: November 2006
Agriculture is a special and problematic case not only in international trade regulation, but also in antitrust law. Special exemptions of the agricultural sector from the full application of competition rules can be found in most jurisdictions. This article discusses these exemptions as they exist in four jurisdictions - the USA, the EU, the UK and Israel - and compares between them and their rationales in each respective system. It shows how the exemption is a product of a country's political economy and ideology and of the role that agriculture has played in its history. The article refutes the claim that the Israeli exemption is simply an imitation of other jurisdictions by showing that none of the agricultural exemptions in these foreign jurisdictions is nearly as wide as that adopted and still maintained in Israel. Rather, this wide agricultural exemption is a result of mighty economic and political interests of the Labor Movement and its affiliated Kibbutz and Moshav agricultural cooperatives. Like in the EC, the exemption was also a part of a general agricultural policy that favored heavy involvement of the government in this sector and protection of farmers' interests, often at the expense of consumers. However, even after this policy has been changed and replaced by deregulation and free market policies, the agricultural lobby and other powerful commercial interests have managed to thwart government attempts to abolish or limit the exemption. It is also shown how this exemption may violate international trade agreements, such as GATT and bilateral FTAs. The article concludes with a discussion of the possible rationales for a special exemption for the agricultural sector and its desired confines and mechanics. Based on this normative analysis, the article proposes amendments to the existing exemptions in these four jurisdictions.
Keywords: Agriculture, Antitrust, Competition, Exemption, Comparative Law, Israel, EC, US
JEL Classification: K21, K33, L13, L41, N50, Q13
Suggested Citation: Suggested Citation