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Coalition: Proposed JBS, XL Beef Merger Harmful

Coalition: Proposed JBS, XL Beef Merger Harmful

Groups say a proposed cattle processing merger would reduce market competition

More than 40 ag groups sent a letter to the U.S. Department of Justice last week asking for an expanded investigation into a proposal made by food processing company JBS USA to acquire two U.S.-based beef packing plants owned by Canadian-based XL Four Star Beef.

JBS on Oct. 17 announced it would be taking over management of the plants, and had signed an agreement which included exclusive options to purchase the plants, located in Omaha, Neb., and Nampa, Idaho. Also included in the agreement were two slaughterhouses in Canada and additional Canadian property.

Proposed JBS-XL beef processing merger is met with opposition.

The ag groups assert in their letter that the proposed merger would reduce competition and harm cattle producers and consumers in the U.S.

"We request that no early termination of the antitrust evaluation regarding the acquisition of the two U.S.-based beef packing plants be granted and that the Justice Department make a second request for information to extend the investigation," the letter says.

R-CALF USA, a signatory on the letter, previously sent a request for investigation into the possible effects of a merger to the USDA Grain Inspection Packers and Stockyards Administration Administrator Larry Mitchell, U.S. Attorney General Eric Holder and USDA Secretary Tom Vilsack.

The R-CALF letter, dated Oct. 24, said the proposed merger is "anticompetitive."

“It is now confirmed that the threat to our cattle industry’s fast-receding competitive marketplace is real and so our requests for an investigation and enforcement action against this threat are now in play,” R-CALF CEO Bill Bullard said in an October statement.

Both R-CALF and the latest letter point out that the current merger on the table is the second from JBS that they say threatens competition. In 2008, the DOJ initiated antitrust enforcement action that prevented JBS USA from acquiring National Beef Packing Company, the fourth largest beef packer in the U.S.

"The Justice Department must not retreat from the historically significant effort it started in 2008 to curb the pervasive erosion of competition in both the U.S. cattle market and the consumers' beef market," the latest letter notes.

The group requests that the DOJ to initiate an extension of the merger waiting period to provide additional time for review of the merger, as well as requesting further information including cattle procurement practices, competition levels and the history of JBS's previous acquisitions of closed packing plants.

Click here to view the letter and a complete list of signatories.

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