Smithfield Foods settles charges of pre-merger coordination

Smithfield Foods Inc. will pay US$900,000 to settle allegations that it engaged in illegal pre-merger coordination with Premium Standard Farms LLC after the merger was announced in 2006, the US Justice Department said Thursday (Jan 21).

The department's antitrust regulators alleged the companies didn't observe the pre-merger waiting period that required the companies to operate independently until the US$810-million deal received regulatory clearance.

The department alleged Smithfield exercised operational control over a significant segment of premium standard's business before the waiting period expired.

Smithfield completed the acquisition in May 2007. "Merging companies must remain independent in their ordinary business operations, including purchasing decisions, until the end of the premerger waiting period," Christine Varney, the department's antitrust chief, said in a statement. Observing the waiting period ensures that the marketplace remains competitive which ultimately benefits consumers, Christine added.