Pork processor merger raises more questions

21-09-2006 | |
Pork processor merger raises more questions

The announced Smithfield-Premium Standard Farms (PSF) merger is raising more questions as now the Republican senator Charles Grassley (Iowa) called on the Department of Justice too to have a closer look to the merger.

Earlier on, Iowa’s Democrate senator Tom Harkin, also expressed his worries about the announced merger. His worry is also that the deal violates anit-trust laws.
In a letter to the Justice Department‘s antitrust division, Grassley said the merger would hurt independent farmers by reducing the number of places they can sell their pigs. “I have strong reservations about this proposal and the continued trend in concentration in the pork industry,” he wrote.
Smithfield will be paying approximately $810 million for the proposed PSF takeover, announced on Monday. The merger brings Smithfield Foods, the nation’s largest pork processor and marketer and hog producer, together with the second-largest pork producer and the sixth-largest pork processor in the US.
Grassley added, “This merger would allow Smithfield/PSF to control over 1.2 million breeding animals,” calling it ‘alarming’ to see that Smithfield is intending “to purchase its competitors to assert its dominance in the pork industry.”
Criticism is not only confined to the state of Iowa. Missouri governour Matt Blunt sent a letter to US attorney general Alberto Gonzalez asking for an anti-trust investigation as well.
In a story published by the Des Moines Register, Dennis Treacy, Smithfield’s vice-president of environmental, community and government affairs, said anti-trust issues were considered before the companies began negotiating.