US courts are cracking down on the 'OPEC of Potatoes' and other food conglomerates

The United Potato Growers of America - dubbed the "OPEC of Potatoes" by critics - has been accused of inflating prices by planting fewer acres and destroying crops, Bloomberg's Isaac Arnsdorf reports.

And in June a federal judge reportedly approved a $5.5 million settlement from the growers. The case is expected to be finalized later this year.

"Despite negotiating a settlement, potato growers steadfastly maintain they did not participate in any illegal activity or wrongdoing," the group said in a statement, according to Bloomberg.

Potato farmers aren't alone: Other agricultural producers including groups in the egg and milk businesses are also being accused of market manipulation.

Interestingly, it all goes back to one antitrust law that was enacted in the 1920's.

Back then, small-time farmers were struggling with weak post-WWI demand. So to the help them out, the government allowed them to band together and demand fair prices.

And while that was fine 90 years ago, today the situation is different as most farms aren't tiny family-run ventures anymore - they're mostly huge conglomerates. Consequently, a law that's designed to protect the little guys is being leveraged by giant US agribusinessees.

"The idea of these small independent farmers being able to come together to keep from being screwed by the buyers has been eclipsed by time and massive consolidation," Thomas Horton, a law professor at the University of South Dakota, told Bloomberg.

"So you have this antiquated law and now you have the courts trying to struggle to say, hey, this is not carte blanche to engage in all kinds of anti-competitive behavior."

Check out the whole story at Bloomberg >