The third domino falls:

GMA President Pamela G. Bailey joins FDA Commissioner Stephen Ostroff and Jeffrey Wadsworth President of Battelle in conceding to Sherman antitrust violations

Important DefinitionsOn July 18, 2015, the President of the Grocery Manufacturers Association (GMA), Pamela G. Bailey conceded that GMA and their 300-plus member companies colluded with the FDA to pilfer technology worth billions of dollars.  Bailey is the third industry leader to concede guilt over the past month in a rapidly growing scandal that is shedding new light on exactly how GMA and their 300+ food industry member companies are violating Sherman Antitrust laws.

The saga began three years ago when the Food and Drug Administration stole the predictive analytic patents and trade secrets from a small hi-tech company.  Gartner has recently estimated that big data including predictive analytics will drive $212 billion of IT investment by 2018.  The FDA, with the help of one of their favored contractors, Battelle Memorial Institute, hijacked the technology and had it duplicated to help create their own multi-million dollar predictive analytic line of tools.

In April of this year, the small business owner of the technology, Projectioneering LLC, was invited to attend the GMA Science Forum, a premier food industry conference.  At the conference he saw a presentation by the food industry giant Cargill that is a member of GMA.  The presentation showed that GMA, Cargill and Battelle were colluding to develop predictive analytic tools using the small company’s patented ideas and trade secrets that were originally stolen by the FDA with the help of one of the FDA’s most favored support contractors- Battelle Memorial Institute.

“By commandeering our intellectual property and producing duplicate products, the FDA and their industry cronies engaged in anticompetitive conduct,” said John Hnatio, President of Projectioneering, LLC.  “Small businesses are particularly susceptible to this type of predatory behavior by a federal regulatory agency like the FDA that has been captured by the very same food companies it is supposed to be regulating.” Hnatio goes on to say, “With regulatory capture what you end up with is a large enterprise of government and their industry cronies more intent on making money rather than protecting the safety of the consumer.”

In the 1890’s when the Sherman Antitrust Act was passed by Congress the main concerns were the industry giants who came together in what were then called “trusts” which is really just another name for a cartel or monopoly where the members collude to increase their profits at the expense of the consumer.  The law makes it clear that any conduct by companies that collude in ways that result in harm to the consumer represents anticompetitive conduct.

“What’s different today, is that the power of federal agencies like the FDA has grown almost unchecked for over a century.  When you combine this increase in power with regulatory capture, what you really have is a big enterprise of food companies that work together to engage in anticompetitive conduct with the government as a partner in the process,” Hnatio says. “In the past it was the government that was supposed to hold industry accountable for anticompetitive conduct, but today that’s no longer true.  The government itself has become a practicing member of a huge food industry cartel!”

There are many warnings that signal the emergence of the vast government and food industry enterprise in the United States. Among these include the theft of technologies that can reduce the cost and risks associated with producing the foods we eat that are exploited to lower overheads and increase industry profits at the expense of the consumer’s health.  “What the FDA did was steal a valuable technology and diffuse it in a way that its’ favored contractor (Battelle) and their food company cronies wouldn’t have to pay for it,” says Bruce Becker, the President of FoodQuestTQ LLC.  Another warning signal is how food safety standards are developed.  “The collusion between organizations such as GMA, Battelle and the FDA to create food safety standards that are designed to maximize profit rather than make the food we eat safer, is a classic example of the new and dangerous antitrust environment that has resulted from the regulatory capture of the FDA,” Becker added.

A third area involves the lobbying of our political leaders to influence the cost of new food safety standards.  GMA’s Political Action Committee made $222,245 in political contributions at the federal level in 2014 — 63 percent to Republicans and 37 percent to Democrats — according to the Center for Responsive Politics.[1]  The top recipient of GMA political contributions from 1989 through the second quarter of 2014 was Democratic Senator Ron Kind of Wisconsin, according to the Sunlight Foundation.[2]  GMA made $11,073,608 in political contributions at the state level in 2014, according to the National Institute on Money in State Politics.[3]  It has spent $41,052,904 in lobbying at the federal level 1989 through the second quarter of 2014, according to the Sunlight Foundation.[4]  It spent $4,620,347 lobbying at the federal level[5] and had eight lobbyists active in three states in 2014.[6]

On June 21, 2015, Acting Commissioner Dr. Stephen Ostroff conceded that the Food and Drug Administration was colluding with their contractors and the food industry to engage in anticompetitive conduct.  On July 16, 2015, Dr. Jeffrey Wadsworth, President of Battelle conceded that Battelle engaged in anticompetitive conduct.  On July 18, 2015, it was Pamela Bailey’s turn to concede GMA’s involvement as a member of the enterprise. “What’s important here is not to look at just the wrongdoing committed by each individual member of the enterprise,” said Hnatio. “Instead, you must look at the collective impact the collusion between the FDA and among the other members of the enterprise.  The cartel is huge when you realize that the GMA alone represents over 300 companies in the food industry,” he added. The concessions of guilt by Commissioner Ostroff of the FDA, Pamela G. Bailey, President of GMA and Jeffrey Wadsworth, President of Battelle can be reviewed in their entirety at https://jgpis.org

[1] Center for Responsive Politics, Grocery Manufacturers Assn Summary, Open Secrets political influence database, accessed April 2015.

[2] Sunlight Foundation, Grocery Manufacturers Assn, Influence Explorer, accessed April 2015.

[3] National Institute on Money in State Politics, Grocery Manufacturers Association: As a Contributor: Giving by Election Year, Follow the Money state political influence database, accessed April 2015.

[4] Sunlight Foundation, Grocery Manufacturers Assn, Influence Explorer, accessed April 2015.

[5] Center for Responsive Politics, Grocery Manufacturers Assn: Lobbying: Summary, Open Secrets political influence database, accessed April 2015.

[6] National Institute on Money in State Politics, Grocery Manufacturers Association: Lobbying Information: As a Client: By Year, Follow the Money state political influence database, accessed April 2015.

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