Senator Elizabeth Warren, backed by some dozen other US lawmakers, told the Justice Department that a plan to merge chicken producer Sanderson Farms with smaller rival Wayne Farms “raises significant antitrust concerns”, reported Reuters.
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.”
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