Coalition Wants DoJ to Examine Smithfield Acquisition

Warning of potential concentration in both cattle and hog industries, fifteen organizations call for Department of Justice investigation.

Published on: Sep 29, 2006

In a Thursday letter to Attorney General Alberto Gonzalez, a coalition of fifteen agriculture and consumer groups call upon the Department of Justice to investigate Smithfield Foods' planned acquisition of Premium Standard Farms.

The coalition contends the proposed acquisition, if approved, will escalate the excessive consolidation of livestock markets and could lead to the potential manipulation of consumer retail prices for pork and beef products, and that the deal would lessen competition in the livestock industry.

The fifteen organizations, including National Farmers Union, livestock producers, rural residents and consumers, sent a letter to Attorney General Alberto Gonzalez asking for a thorough and comprehensive investigation of the sale.

The groups also ask the DoJ to carefully consider the relationships of stakeholders' interests in each company. The ContiGroup, the letter points out, controls nearly 40% interest in Premium Standard Farms, and last year a ContiGroup subsidiary merged with a Smithfield Foods subsidiary to form a cattle feeding alliance. This raises the possibility that the Smithfield-Standard acquisition would cause concentration in both the cattle and hog industries.

"This acquisition has the potential to lead to collusion among a relatively small number of producers and packers to manipulate the consumer price of pork and beef," the letter warns. "Ensuring that livestock markets operate in a free, fair and transparent manner is critical to our nation's agriculture economy. Without such open and competitive markets, independent producers cannot survive and consumers lose."