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Grassley raises red flags on Cargill, Sanderson merger

Editorial credit: Mark Van Scyoc / Shutterstock.com
Combined Cargill-Continental Grain-Sanderson Farms would control approximately 15% of the U.S. chicken market.

In the wake of a proposed joint acquisition between Cargill and Continental Grain Company of Sanderson Farms, Senate Judiciary Committee ranking member Chuck Grassley, R-Iowa, sent a letter to Department of Justice officials urging a thorough examination of the deal.

If combined, the joint venture will have a value of $4.53 billion. At closing, Cargill and Continental Grain will combine Sanderson Farms, the third largest poultry producer in the United States, with Wayne Farms, currently a subsidiary of Continental Grain, to form a new poultry business. According to industry analysts, a combined Cargill-Continental Grain-Sanderson Farms would control approximately 15% of the U.S. chicken market.

In a letter to Richard Powers, acting assistant attorney general of the antitrust division at DOJ, Grassley says, “I am concerned that continued mergers and acquisitions in an already concentrated poultry industry will increase consolidation, frustrate competition and reduce marketing options. I also am concerned about the impact on consumer choice and price of poultry products.”

Grassley urged the Antitrust Division to thoroughly examine this proposed acquisition to preserve a competitive market in the U.S. poultry industry. He also urged the Antitrust Division to seek input from USDA in its analysis of the proposed transaction and its impact on the poultry market.

“The Antitrust Division should scrutinize this proposed acquisition to ensure that it will not reduce market access opportunities or facilitate anti-competitive and predatory business practices in the industry,” says Grassley. “As you know, the poultry industry recently has been investigated for conspiring to fix prices and rig bids for chicken products, and pass on the costs to consumers and other purchasers."

“Further, the Antitrust Division should consider whether the proposed acquisition will result in more limited choices of poultry products and higher prices for consumers,” Grassley says.

The Senate Judiciary Committee held a hearing July 28 on competition and consolidation in America’s food supply chain, specifically in the beef industry.  The witness panel includes representatives from farm to table.

TAGS: Poultry
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