How Crony Capitalism Almost Destroyed a Small Vegan Business

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Crony capitalism, what many still believe to be actual capitalism, is everywhere. That’s why every aspect of modern life seems to be ruled by those who nurture a cozy relationship with government.

Even what you eat for breakfast is under their control.

Last year, we learned that the American Egg Board, a group of egg producers supervised by the US Department of Agriculture (USDA), had used its influence and might to (try to) destroy a small company, the start-up Hampton Creek, which is behind Just Mayo.

The egg-less product became the target of the crony organization, which is funded by the mandatory fees members of the industry must pay, whether they are willing to be part of the organization or not. The USDA is in charge of overseeing the group’s budget and activities, making the AEB an arm of the state. So when the group’s president called the vegan Just Mayo a “crisis and major threat to the future of the egg product business” in an email and a USDA official suggested having Just Mayo’s labeling claims challenged with the US Food and Drug Administration, Hampton Creek was hit with a warning letter claiming that they had made unauthorized claims regarding their product, effectively “misleading” consumers by using the image of an egg on the label of a vegan item.

But the FDA move wasn’t enough. Later, the cartel group with direct ties to the US government moved to hire a lobbyist with the goal of making the grocery chain Whole Foods stop selling Just Mayo. While this step backfired, AEB ended up looking to another corporate ally to put an end to the competitor by convincing Unilever, the manufacturer of Hellman’s Mayonnaise, to file a lawsuit against Hampton Creek.

The lawsuit was later dropped.

A Freedom of Information Act request helped us learn more about this sordid pursuit against the small company just because of its competitive factor, giving us yet another great example of how government and special interests often work together to put an end to anything that makes them uncomfortable.

In a recent article for the Tenth Amendment Center, Mike Maharrey claimed that this episode in the recent history of food regulations shows the importance of fighting the federal government locally. After all, Maharrey wrote, “[t]he Constitution does not delegate the federal government any authority to regulate food safety.”

Despite the lack of legitimate authority, special interest groups like the American Egg Board continue to become involved with government, both local and federal. As they obtain privileges and special treatments that competitors do not enjoy, lobbyists work alongside lawmakers to solidify their clients’ position, oftentimes creating a scare regarding their competitors’ products that are sometimes powerful enough to nearly destroy small companies.

The result? Consumers end up having restricted access to variety, forcing the prices of commodities to go up.

Even if you’re not entirely positive the US Constitution should be followed at all times, you might agree that, if regulators and lawmakers do, indeed, have the health and safety of consumers in mind, they should be celebrating and welcoming new competitors in the food market, not fighting to keep the number steady. ​