October 21, 2008

 

US DOJ attempts to prevent JBS-Swift's from purchasing National Beef

 
 

The US Department of Justice filed a civil antitrust lawsuit Monday, 20 October 2008 in US District Court in Chicago to block JBS-Swift & Co.'s proposed acquisition of National Beef Packing Co., contending the deal would cause financial hardship on consumers and producers and harm industry competition.

 

The Attorneys General of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming are joining in the lawsuit.

 

The DOJ concluded that combining JBS-Swift and National Beef, the third- and fourth-largest US beef packers, respectively, would result in lower prices paid to cattle suppliers and higher beef prices for consumers.

 

In court documents, the department deal would also eliminate a competitively significant packer and place more than 80 percent of domestic cattle slaughter capacity in the hands of three companies: JBS, Tyson Foods Inc. and Cargill Inc., said the department.

 

Assistant attorney general in charge of the DOJ's Antitrust Division said the combination of JBS and National will likely lead to grocers, food service companies and ultimately American consumers paying higher prices for beef. It will also lessen the competition among packers in the purchase of cattle that has been crucial to ensuring competitive prices to the nation's thousands of producers, ranchers and feedlots.

 

JBS announced in early March it had reached agreements to purchase Kansas City, Mo.-based National Beef (US$465 million), Smithfield Beef Group (US$565 million) and Australia's Tasman Group (US$150 million).

 

A DOJ spokesman said the department is not challenging JBS's proposed purchase of Smithfield Beef Group, the nation's fifth-largest beef packer, or the Five Rivers cattle feeding operation.