Source: Bloomberg
A planned merger of the third- and sixth-largest chicken processing companies in the U.S. would further concentrate the poultry market, facilitating price-fixing and harming farmers, said a group of Democratic lawmakers including Senator Elizabeth Warren.
The $4.5 billion acquisition of Sanderson Farms Inc. by Continental Grain Co. and Cargill Inc., the largest private company in the U.S., raises antitrust concerns and should be investigated and potentially opposed by the Justice Department, wrote 13 lawmakers, many of whom have criticized the deal before. The letter was sent to the division’s antitrust chief, Jonathan Kanter, who recently said he prefers suing to stop problematic mergers rather accepting settlements and allowing deals to proceed.
Sanderson Farms shares fell as much as 1.6% to to their lowest value since July 2021 after Reuters reported the renewed scrutiny Thursday morning. Last year, shares climbed 44.5%, benefitting from soaring prices of chicken and the merger news. After the acquisition, Sanderson Farms would then be merged with Wayne Farms LLC. The deal was initially expected to close by the end of 2021 or early 2022, but has been delayed by the Justice Department’s investigation.
“The Administration should carefully scrutinize this merger and oppose it if it is likely to reduce competition and have an adverse impact on consumers or farmers,” the lawmakers wrote. Efforts to discourage greater corporate consolidation have been a key aspect of President Joe Biden’s economic policy.
Read More: Biden Says Fight Against Consolidation Will Help Tame Inflation
The Justice Department has been investigating what it says is a price-fixing conspiracy by the country’s biggest chicken producers.
Shortly after the deal was announced in August 2021, lawmakers including Democratic Senator Cory Booker from New Jersey and Republican Chuck Grassley of Iowa expressed concern and encouraged Justice Department action. In November, Warren, who is from Massachusetts, asked the Justice Department to investigate price-fixing and consolidation in the poultry industry. Chicken prices remain higher than the pre-pandemic record, though are down from a June 2020 high.
“Price fixing among the ‘Big Four’ poultry companies — Tyson Foods, Pilgrim’s Pride, Perdue, and Sanderson Farms — has been a widespread issue for several years, made easier by their joint 54% market share as of 2021,” the lawmakers wrote.
