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July 06, 2006


In one of my shoot-from-the-hip and see-if-you-can-shock-your-liberal-friends comments a few years back, I argued that international competition had largely rendered the antitrust laws irrelevant, because the degree of competition that now exists when you include companies based abroad makes monopolization very difficult. I went on to argue that there are three industries in which the antitrust laws still need to be vigorously enforced: (1) the legal profession; (2) colleges and universities; and (3) the kosher food business. (For an example of the kind of thinking that puts the kosher food business in my pantheon, read this story from a few years ago.)

The first two industries have been targeted to a small degree, and now, it seems, it's time for the third. The New York Jewish Week reported last week that subpoenas have been issued to a kosher slaughterhouse and kosher meat suppliers in a criminal antitrust investigation.

A law enforcement official who specializes in antitrust cases termed the fact that a federal grand jury had issued the subpoenas “very significant.” The official would speak only on the basis of anonymity because he thought his office could end up involved in the case.

“That means it’s a criminal investigation,” he explained. “Price fixing, bid rigging and market allocation are the kinds of practices that are traditionally pursued criminally. … It sounds like they are investigating collusion within the industry.”
The article describes some of the ways in which the prohibitions of the antitrust laws might be transgressed.
One industry insider, who would speak only on condition of anonymity, said the unique certification process involved in producing kosher meats made the industry particularly vulnerable to potentially illegal market allocation.

“There is an unwritten agreement not to traipse on each other’s hekshers,” he explained, referring to the rabbinic kosher certifiers who give their stamp of approval to the ritual processes by which meat must be slaughtered under religious law.

The power of custom and sectarian loyalty to particular kosher certifiers among various Jewish religious groups means “if you have a certain heksher, you have a lock on a certain part of the market geographically and religiously,” this insider said. Lubavitch and Satmar chasidim, for example, have separate certifiers to which they are each exclusively loyal. The meat companies, understanding this, effectively divide up the market by agreeing not to use each other’s certifiers, the source explained.

In one case, said the industry insider, a company that recruited a different kosher certifier to come in and oversee its production process was excoriated by the rest of the industry. “They said, ‘You slept with my wife,’” this source said the company was told by others using that certifier.
Despite my argument for investigating the kosher food industry, no one wants the government getting involved in matters involving the free exercise of religion. The fact that the kosher food industry has behaved in a manner that would lead an obviously skittish government agency into an investigation is a shande.