US: JBS faces flak over planned US deals
Senator Herb Kohl, who is chairman of the US Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, wrote to the US Justice Department to argue that the deals were uncompetitive.
In March, JBS, the world's largest beef processor struck a deal to buy National Beef Packing Co., the fourth-largest beef processor in the US, for US$560m. JBS also moved to acquire Smithfield's beef business for $565m.
Should the acquisitions get clearance from US anti-trust officials, JBS will usurp Tyson Foods as the largest beef processor in the US, accounting for almost a third of beef sales in the country.
However, Senator Kohl said the deals would cause "substantial harm" to competition in the sector.
Kohl pointed to the negative impact on cattle ranchers, who could face lower prices. "By reducing the number of major buyers for ranchers' cattle from five to three - and in some regions even one or two - this deal will give the remaining beef processors enormous buying power. With little choice to whom to sell their cattle, ranchers will increasingly be left in a 'take or leave it' position," Kohl wrote.
"These acquisitions are likely to substantially increase the market power of three remaining national meatpacking firms, and significantly reduce the prices ranchers are able to obtain for their cattle."
Kohl went further, arguing that beef prices in supermarkets could rise as a consequence of the JBS deals.
"Reducing the number of major suppliers of beef from five to three obviously leaves retailers and restaurants, and ultimately consumers, with significantly fewer competitive choices," Kohl argued. "With food prices already rising recently, this enormous consolidation in the beef processing industry is likely just to add to higher food prices at a time that consumers can least afford it."
Officials at The US Justice Department and at JBS could not be reached for immediate comment.
The slump in the share price of Premier Foods last week serves to underline the threat that unstable credit markets represent to major food companies, particularly those with high debts. Ben Cooper re...
Smithfield Foods has today (18 December) announced that the merger of its European subsidiary Groupe Smithfield and Spanish meat group Campofrío Alimentacion has been finalised....
Workers at Smithfield Foods' meat packing plant in Tar Heel, North Carolina, have voted to unionise....
As Christmas nears and the temperatures drop here in the UK, competition in the food industry is heating up. This week saw two of the country's leading retailers, Tesco and Morrisons, issue an update ...
US pork producer Smithfield Foods has seen first-half operating profit plunge, despite a gain in sales, as high input costs hit its turkey and hog production units....
US cattle farming lobby group R-Calf and the Organisation for Competitive Markets (OCM), have filed joint litigation in the US District against the proposed acquisition of National Beef Packing Co by ...
The merger of Smithfield Foods' European subsidiary and Spanish meat group Campofrío has won shareholder approval....
Smithfield Foods has completed the sale of its domestic beef operations to Brazil's JBS....
- Danone's Q1: four things to learn
- Who will buy Danone's Stonyfield business?
- Column: Why snacking is the new meal
- Opinion: Big Food needs to think radically
- Nestle Q1 update: four things to learn
- Nestle to cut UK confectionery jobs
- PepsiCo affirms full-year target as Q1 hits mark
- Glanbia signs deal on Dairy Ireland stake sale
- Dole Food Co. files to go public again
- 2 Sisters' chief Boparan invests in UK's Crawshaw