WASHINGTON (Reuters) -Senator Elizabeth Warren, backed by some dozen other U.S. lawmakers, told the Justice Department that a plan to merge chicken producer Sanderson Farms with smaller rival Wayne Farms “raises significant antitrust concerns.”
Commodities trader Cargill Inc and Continental Grain Co announced in August that they would buy Sanderson Farms, the third largest chicken producer, and combine it with Continental’s Wayne in a deal worth some $4.53 billion.
Chicken prices have risen sharply in the previous year, and the Justice Department has been pursuing price-fixing in the sector but the market shares for the combined company isn’t as large as is usually seen in merger challenges.
In the letter, sent on Wednesday to Jonathan Kanter, head of the department’s Antitrust Division, Warren, Representative Mondaire Jones and others said the poultry industry has a history of colluding to fix prices for consumers.
They said that because of consolidation among chicken producers which do the slaughtering, farmers who actually raise chickens may have just one or two producers in a particular region to do business with. The pay of a typical chicken farmer fell more than 6% between 1988 and 2015, Warren said.
“This mega merger, in a sector already plagued with consolidation and illegal behaviors that harm farmers and consumers alike, represents a new threat to building a competitive agricultural industry,” the lawmakers wrote. “We respectfully urge the DOJ to scrutinize the proposed Sanderson-Wayne transaction to determine whether it violates the antitrust laws, and the DOJ should oppose the merger if it does.”
Cargill and Continental Grain said in a statement that the planned deal would create a new player “which will be in an ideal position to expand options and increase supply for consumers.”
“This new company plans to pursue new investments to expand its operations, creating new high-quality jobs, and benefiting local communities in seven U.S. states,” they said in a statement.
In addition to Warren and Jones, among those signing the letter were Democratic Senators Cory Booker and Richard Blumenthal, independent Senator Bernie Sanders and Democratic Representatives David Cicilline, Hank Johnson and Katie Porter.
Warren in November had called on the Justice Department to investigate the impact of price-fixing and consolidation in the poultry sector on consumers and farmers. She had also urged the department’s Antitrust Division to review “with suspicion” any large mergers in the industry after Cargill and Continental in August announced the Sanderson deal.
(Reporting by Diane Bartz; Editing by Leslie Adler and Chizu Nomiyama)
