JBS, the Brazilian beef giant, has hit back at the decision from US regulators to block its planned acquisition of local firm National Beef Packing Co.
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Earlier this week, the US Department of Justice moved to block the proposed US$970m deal over fears it would hit competition in the sector, lead to higher prices for consumers and reduce the prices paid to suppliers.
According to the DoJ, if the deal were to go ahead, the top three US beef packing companies would control approximately 85% of the market.
However, JBS defended its plan to buy National Beef. “This transaction is highly pro-competitive and will generate significant efficiencies and synergies that will benefit our cattle suppliers and our beef customers,” said Wesley Batista, president and CEO of JBS USA. “We believe the government’s case is misplaced and we look forward to defending this matter in court.”
US cattle farming lobby group R-Calf remained unconvinced by JBS’s declaration.
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By GlobalData“This statement is demonstrably false,” R-Calf CEO Bill Bullard said. “The transaction represents a buying-out of the competition, as both JBS and National Beef currently compete in the marketplace for both the purchase of live cattle from cattle producers and for the sale of beef to retailers, restaurants, and wholesalers.”
R-Calf also disputed JBS’s claim that the deal would generate synergies that would benefit cattle producers and consumers.
“Nothing could be further from the truth,” Bullard asserted. “The merger would have accorded JBS with tremendous market power, giving it dominant control over a marketplace that essentially would consist of only two other – and two smaller – market participants. This dominant market power would enable JBS to exploit both cattle producers and beef consumers.”
The debate looks set to continue as the DoJ has started legal proceedings to block the deal.
JBS’s move to buy National Beef was one of two deals it announced in March that were set to make it the largest beef processor in the US. The second acquisition, of Smithfield Foods’ beef operations, was cleared on Monday (20 October) by the DoJ.
