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Tags: Regulation

PepsiCo Protects America from Rogue Hummus



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If you thought tasty chickpea spreads were pretty low on the list of things from the Middle East to worry about, maybe you just don’t appreciate how regulation works. Sabra Dipping Co. LLC is petitioning the Food and Drug Administration to protect Americans from counterfeit hummus.

“The growing popularity of hummus in the United States has led to the introduction of dips and spreads that are not based on the traditional ingredients of chickpeas and tahini but nevertheless are labeled as ‘hummus,’” Sabra, a joint venture between PepsiCo and Israel-based Strauss Group, writes in its citizen petition to the FDA. “Because these products replace the traditional chickpea with other legumes — such as black beans, lentils, white beans or edamame (soy beans) — the marketing of these products as ‘hummus’ undermines honesty and fair dealing in the marketplace.”

Sabra’s petition and supporting documents were filed with the FDA in February, but the story is getting a flurry of attention this week. The Forward notes that the company puts out its own share of barely recognizable hummus varieties, and the FDA documents themselves contain a definition that casts some doubt on Sabra’s own reliability: Garlic and lemon juice are listed as “optional ingredients,” and olive oil is put on an equal footing with soybean, canola and corn among acceptable oils. The definition seems to be only that hummus must contain mashed chickpeas and sesame seed paste — in much the same way that if you put a wheat or cereal product on the same plate with a vine-grown edible, you have made spaghetti.

If Sabra wants to sell a chipotle hummus, more power to them. Consumers have spent millions of dollars on the company’s dry, bland, plastic-tasting product, and nobody was forcing them. But this FDA petition is about hobbling rivals, not helping restore the consumer’s “confidence in the food supply.” Only the excellent Tablet magazine even hints at the possibility that Sabra, which has about 60 percent of this rapidly growing market, might be looking to lock out competitors.

The phenomenon is called “regulatory capture,” and the reason you almost never hear about it is because the public and the media have fully internalized the language of good government. When big companies exert political influence, they are not trying to end regulation of their industries: They’re trying to create it so that competitors have a harder time completing. Notice how no company ever agitates for stronger regulations before it becomes the dominant player.

Hummus provides a very handy case study. This is a product (“recorded in cookbooks published in Cairo in the 13th century,” according to the complain) that has only started to catch on widely in the last ten or fifteen years, one that can be made without much difficulty by anybody with a good blender. You could be making an ingredient-perfect version of the product and still not be able to put up with the compliance burdens an FDA ruling would create.

This is what politicians and lobbyists mean when they talk about a “level playing field.” You and PepsiCo both get to deal with red tape, but only one of you has an army of lawyers and a host of administrators to deal with it. (That’s assuming the bigger company hasn’t also managed to tailor the regulations to include all sorts of loopholes for itself.) PepsiCo spent an average of about $5.4 million per year on lobbying since 2009, according to OpenSecrets; and unless there was some big reduction in the Code of Federal Regulations over that time (there wasn’t), I don’t think they were spending that money to promote deregulation.  

By the way, I blame putatively “pro-business” conservative pundits as much as the liberal media for the poor public understanding of how regulation works. To hear the vast right-wing conspiracy tell the tale, the Consumer Financial Protection Bureau is going to be a threat to Wall Street rather than a tool of it. In fact, the two best popular analyses of regulatory capture may be in Hollywood movies: Pan Am’s collusion with Senator Owen Brewster against Howard Hughes is the climax of Martin Scorsese’s The Aviator, and the Big Three’s political hounding of Preston Tucker makes up most of the plot of Francis Ford Coppola’s underrated Tucker: The Man and His Dream.

Hummus may not rise to the level of those titanic struggles (though everybody — except Dick Gregory — has to eat). But it’s a good example of how regulatory dynamics work. The claim that getting the FDA involved will promote a “spirit of fairness” is a crock. And the crock is not filled with hummus.

Tags: Big Business , FDA , Regulation

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