The Department of Justice announced Monday that it would go to court to
stop the nation's third-largest beef packer, JBS SA, from acquiring
rival beef packer National Beef Packing Co., part of U. S. Premium Beef
LLC. However, DOJ will permit JBS, which owns Swift, to acquire
Smithfield Beef Group Inc., as its parent seeks to refocus on global
pork production and packaging. Thirteen Western and Midwestern states
joined DOJ in the legal challenge.
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JBS has not yet responded to inquiries about whether it would fight the case in court.
It's
the first time in about four years that DOJ's antitrust division has
challenged a proposed merger in court -- a fact which has caused some
teeth gnashing in Washington, especially from Capitol Hill where
politicians with antitrust oversight authority have repeatedly voiced
concerns. In fact, in May, Sen. Herb Kohl, D-Wis., who heads the Senate's
Antitrust Subcommittee, wrote, "In this era of rising prices, and ever
increasing consolidation, the need for vigorous enforcement of our
antitrust laws has never been greater, in agriculture and in all other
key sectors of the economy."
He urged Barnett to carefully
review the JBS acquisitions. And on the same day, Kohl asked the
Government Accountability Office to study how the recent spate of
mergers in the agriculture sector are affecting the price of food. That
study has not yet been produced.
DOJ's court brief said that if
JBS were allowed to buy National, about 80% of the nation's beef supply
would be controlled by just three firms: JBS, Tyson Foods Inc. and
Cargill Inc.
The crux for ranchers who opposed the deal was the
fact that Smithfield owns half of a huge feed lot, spread out over
sections of several Western states, known as the Five Rivers Ranch
Cattle Feeding LLC. By buying that facility, JBS will have the ability
to stock and process about 2 million head of cattle annually. That
element of the deal was approved by DOJ.
According to Kohl,
"While I would have preferred that the Justice Department would have
taken action to block the entire JBS acquisition, I am gratified that
the Justice Department has taken action to block a portion of these
anti-competitive acquisitions." -
Cecile Kohrs Lindell
Cecile Kohrs Lindell is senior writer in The Deal's Washington bureau.
