Chapter 12 introduces a new economic framework to analyse power in the food value chain. Spurred on by the increased interest of policy makers and antitrust authorities over the last decade, academic scholarship has made progress in analysing the origins and consequences of different dimensions of power across the value chain: buyer power, bargaining power, economic dependence. This Chapter summarises the key concepts used to analyse and measure power in the food value chain and explores the different theories of harm that have been developed and occasionally tested in recent cases. Far from representing just a ‘mirror image’ of the exercise of seller power, the analysis of buyer power may at times require a different set of analytical tools and a more detailed, case-by-case understanding of its specific origins and effects. From then on, the authors move to suggesting a broader theoretical framework that would encompass all different dimensions of power in the value chain, under the rubric of vertical power. After defining the theoretical contours of the concept, the authors offer some metrics that enable an empirical verification of the existence and exercise of vertical power.

Chapter 7 focuses on the situation in the US, exploring American competition policy with respect to the agriculture and the food system. Public enforcement is split among the Federal Trade Commission, the Antitrust Division of the Department of Justice and the Department of Agriculture. This split creates additional discontinuities in enforcement actions. This Chapter finds that antitrust enforcement has been weak and inconsistent in the United States with respect to anticompetitive conduct and market structure affecting farmers. Buyer power issues have been largely, but not entirely, ignored. The Department of Agriculture has failed to use its authority to protect farmers. Despite the apparent promise of the Obama administration in its early months in office, the trend for the last three plus decades has been an overall failure to protect the long-term interests of producers and consumers in a workably competitive agriculture-food system.

Chapter 4 examines the success of standards in changing prevailing market mechanisms in the conventional commodity chain, and providing reliable market incentives for behavior change. It first takes note that only two out of the seven standards under analysis have the clear aim of fundamentally changing pricing structures. Yet, during a period of mainstreaming and competition between sustainability initiatives, these standards have been overtaken by more industry–friendly alternatives that offer negotiation–based price premiums. Standards’ failure to limit participant entry through strict rule–setting and the existence of information asymmetry regarding buyers’ future purchasing patterns has led to a large oversupply of certified coffee, driving down such premiums. They are also likely to be absorbed by other supply chain actors. The chapter further shows the difficulty of isolating the market–based effects of market–driven regulatory governance from the multitude of simultaneous signals related to quality, origin, or timing. Price incentives trickling down to producers have thus substantially weakened, putting into question their motivation to comply with costly behavioral rules.