Senator wants Smithfield deal review
US senator Tom Harkin (Democrat, Iowa) called
upon the country's department of Justice to thoroughly review Smithfield Foods'
plans to merge with Premium Standard Farms (PSF).
said that the
department should check what impact the merger would have on pork producers,
consumers and hog and pork markets and whether or not the merger would violate
"The merger agreement involves a very substantial change in the structure,
vertical integration and degree of consolidation in the US pork industry," said
Harkin, who is ranking Democrat on the Senate Agriculture, Nutrition and
. "It obviously will have significant impacts on both
independent hog producers and those who raise hogs under contract."
largest pig producing and processing company. Premium Standard Farms
is the nation's second-largest pig
producer and sixth-largest processor. This merger would give Smithfield control
of 20% of US pig production and 31% of pork processing. Economists stated that
when four firms control over 40% of a sector, in this case pig slaughter, market
competitiveness will decline.
A JP Morgan Chase
research associate, however, predicted that anti-trust issues were not to be
expected. The associate, Akshay Jagdale, said Smithfield's growth potential as a
result of the merger is minimal, but the company would profit from several
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