D.O.J. sues to halt JBS, National Beef deal

by Keith Nunes
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WASHINGTON — A civil antitrust lawsuit was filed Oct. 20 by the U.S. Department of Justice (D.O.J.) in U.S. District Court in Chicago to block the proposed acquisition by JBS S.A., currently the third-largest U.S. beef packer, of National Beef Packing Company L.L.C., the fourth-largest U.S. beef packer.

Brazil-based JBS is also in the process of acquiring Smithfield Beef Group Inc. from Smithfield Foods Inc., but the D.O.J. is not challenging that deal. JBS also bought Colorado-based Swift Foods Co. in 2007.

National operates two beef packing plants in Liberal and Dodge City, Kan., and one plant in Brawley, Calif. National’s annual beef sales are approximately $5 billion.

"We are disappointed that the D.O.J. does not recognize that this transaction is pro-competitive and we plan to vigorously contest the D.O.J.’s attempt to block it," said Steve Hunt, U.S. Premium Beef L.L.C. chief executive officer. The U.S.P.B. is majority owner of National Beef Packing Co.

In explaining its lawsuit, the department charged the proposed JBS/National Beef Packing deal would combine two of the top four U.S. beef packers resulting in lower prices paid to cattle suppliers and higher beef prices for consumers. The Attorneys General of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming are joining the D.O.J.’s lawsuit.

"The combination of JBS and National will likely lead to grocers, food service companies and ultimately American consumers paying higher prices for beef," said Thomas O. Barnett, assistant attorney general in charge of the Department’s antitrust division. "It will also lessen the competition among packers in the purchase of cattle that has been critical to ensuring competitive prices to the nation’s thousands of producers, ranchers and feedlots."

JBS’s acquisition of National substantially would restructure the beef packing industry, eliminating a competitively significant packer and placing more than 80% of domestic fed cattle packing capacity in the hands of three firms: JBS, Tyson Foods Inc. and Cargill, the D.O.J. said.

Lawyers for the D.O.J. concluded the acquisition would decrease competition among packers in producing and selling U.S.D.A.-graded boxed beef nationwide. It further concluded the proposed acquisition would lessen competition among packers for the purchase of fed cattle in the High Plains, centered in Colorado, western Iowa, Kansas, Nebraska, Oklahoma and Texas, and the Southwest.

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