R-Calf Go to Justice Department Over JBS Deal

US - R-Calf, the cattle action group, has recently sent a 35 page formal request to the US Justice Department asking for a thorough analysis on the imminent acquisition of National Beef Packing Co., Smithfield Beef Group, and Five Rivers Ranch Cattle Feeding, by JBS.
calendar icon 15 April 2008
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The letter details R-Calf's concerns on the accelerating domination of the beef market and the shifting of American beef companies into the Brazilian hands of JBS.

They say that the proposed merger would most likely violate both the spirit of and express prohibitions contained in the Packers and Stockyards Act of 1921 (PSA), which was designed to afford the U.S. live cattle industry with protections beyond the traditional concerns of efficiency and market competition.

Adding, 'the PSA was designed to prohibit unfair, deceptive, and manipulative acts and practices that have the effect of manipulating or controlling prices, as well as to prohibit the creation of a monopoly. Inasmuch as creation need not occur instantaneously, the JBS-Merger clearly catapults the beef manufacturing industry toward monopolization nationally, and perhaps achieves complete monopolization in certain geographic regions.'

"It’s going to be an uphill battle to stop this, but if JBS becomes the largest packer and the largest feeder in the U.S., it will simply destroy integrity in the cattle market"
R-CALF USA Vice President/Region II Director Randy Stevenson

“We are confident that such a comprehensive analysis will reveal the need to aggressively challenge this merger, as well as to reveal the need to initiate immediate remedial action to halt the anticompetitive practices already prevalent within the U.S. live cattle industry,” said R-CALF USA CEO Bill Bullard. “This organization is going to take every step possible to prevent this merger from happening, and we invite other organizations and concerned livestock producers to join us in this fight. We firmly believe that this merger, in an already concentrated industry, would result in JBS exercising market power to the detriment of producers and consumers, and because of that, the Justice Department should intervene.”

Member-established policy states that R-CALF USA supports aggressive action against any further concentration in the beef processing and retail sales sectors, including the active application of Section 7 Antitrust provisions, and that R-CALF USA also calls upon Congress to pass, and the appropriate government agency to implement, legislation requiring divestiture by the five major meatpackers and five major pork packers of all livestock production assets.

“This is the last stand for independent people in the cattle industry today, and it’s obvious that no one but R-CALF is going to take up this fight,” said R-CALF USA Marketing Committee Co-Chair Dennis Thornsberry. “We’ve seen what’s happened to the hog and chicken industries, and the U.S. live cattle industry is right here on the verge of it. If this merger goes through, I think we’re done. If it goes through, it’s an ideal time for JBS to vertically integrate this industry, and I’m not so sure it’s not a ploy to do that. We know that’s been their goal for at least the past 15 years.”

“It’s going to be an uphill battle to stop this, but if JBS becomes the largest packer and the largest feeder in the U.S., it will simply destroy integrity in the cattle market,” said R-CALF USA Vice President/Region II Director Randy Stevenson, who also co-chairs the group’s marketing committee. “Market integrity provides access to anyone and maintaining market integrity is the No. 1 job of Wall Street and the CFTC (Commodity Futures Trading Commission). Diversification isn’t just horizontal, but vertical also. If you have 10 packers and one makes a mistake, there will be significant waves, but not a tsunami. However, if you only have three packers and one makes a mistake, the result no doubt will be a tsunami throughout the entire industry.”

Further Reading

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