The trend towards monopolization of grain trade that exists in the global market today requires the BRICS countries to cooperate in the field of antitrust policy and antitrust legislation. Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre at the Higher School of Economics (www.BRICSCompetition.org), said at the 9th UN Conference on Competition and Consumer Protection in Geneva.
“Global companies from the food sector should receive the closest attention from antitrust authorities. We emphasize the importance of ensuring food security and nutrition and mitigating the impacts of acute food price volatility, as well as as abrupt supply crises, including fertilizers shortages. The authority of grain traders is highly similar to that of the organizers of digital ecosystems, the digital giants that have already come under scrutiny by antitrust authorities around the world. Under exceptional circumstances of supply shortages or acute food price spikes affecting a BRICS member, we recognize that cooperation initiatives can facilitate emergency responses and natural disaster management, guided by national priorities and consistent with the World Trade Organization rules. None of these measures should lead to unfair trade practices or violations of international trade norms, as their sole purpose is to support food security and nutrition, including through international solidarity.”, – Ivanov emphasized.
“A very telling event has recently taken place – the merger of two major grain traders, Bunge and Viterra. This merger was approved just last week by 31 competition authorities around the world. At the same time, no measures were proposed to limit the influence of these companies on the global value chain – the power that has a huge influence on the global market and the organization of grain trade,” Ivanov said.
He noted that regulators in Brazil and China have already raised concerns, such as the issue of price shifting from global to national markets, but no commitments have been established to address these concerns.
Anastasia Nesvetailova, Head, Macroeconomic and Development Policies Branch, UNCTAD, emphasized the growing influence of financialization on global food markets. Of particular concern, she noted, is the dominance of the so-called ABCD group — ADM, Bunge, Cargill, and Louis Dreyfus — which effectively controls global agricultural trading. Three of these companies do not disclose sufficient information, rendering the sector highly opaque and poorly regulated.
According to Nesvetailova, 70% of transactions on U.S. and European commodity markets today are speculative in nature and disconnected from the real economy. The financial power of commodity traders is increasing, as they evolve into non-bank financial institutions with systemic influence not only on commodity markets but also on global financial stability. Meanwhile, oversight of their operations remains fragmented and ineffective.
“The last time such practices had a systemically destructive impact was in 2007, when an expanding web of debt-driven financial obligations operated largely outside regulatory oversight, ultimately leading to the collapse of the banking system in the U.S. and beyond. A similar scenario could unfold again — this time in the commodity trading sector,” warned Nesvetailova.
Distributed by APO Group on behalf of BRICS Competition Law and Policy Centre.
