Justice Department Fails to Stop Ongoing Monopolization of Beefpacking Industry, R-CALF SaysFri, 29 Mar 2013 12:59:38 CDT
On March 26th, the Obama administration's U.S. Department of Justice closed its investigation into the proposed acquisition of two XL Four Star Beef slaughtering plants, one in Omaha, Neb. and the other in Nampa, Idaho, by Brazilian-owned JBS.
By closing its investigation without taking any antitrust enforcement action, the Justice Department has blessed JBS' merger proposal.
For the first time since the 1920s, the Justice Department, under the Bush Administration, successfully initiated antitrust enforcement in 2008 to block JBS from acquiring the nation's fourth-largest beef packer, National Beef Packing Co.
"We were hopeful that the 2008 Bush Administration action signaled the end to decades of lax antitrust enforcement by the Justice Department in the beefpacking industry and the beginning of a renewed awareness for the importance of preserving competition for independent cattle producers," said R-CALF USA CEO Bill Bullard.
Bullard added, however, that his group's hopes have been dashed by the Justice Department's inaction. "It is now clear that the Obama Administration is afraid to interfere with the Brazilian monolith's plan to strip independent cattle producers of a competitive marketplace and to ultimately capture the live cattle supply chain away from independent U.S. cattle producers and feeders."
When the merger is consummated, JBS will have a slaughter capacity in the United States of approximately 28,500 head per day, making it by far the largest U.S. beefpacker in the United States and in the world.
Bullard said the Justice Department has handed JBS the reins so it can exploit both U.S. cattle producers and U.S. consumers. He said JBS already is the nation's largest cattle feeder, it will become the largest cattle slaughterer, and it will control the largest share of the wholesale U.S. beef market.
"Brazilian-owned JBS' dominant position as cattle feeder, cattle buyer and wholesale beef purveyor will guarantee reduced marketplace competition, both upstream and downstream," commented Bullard.
Just last week Congress granted the multinational meatpackers a reprieve in a special rider attached to the FY 2013 appropriations bill. Not only did Congress insulate them from any further rulemakings that would prohibit them from engaging in unfair, deceptive or discriminatory practices in the marketplace, but also, Congress told them they would not have to comply with regulations previously finalized by the U.S. Department of Agriculture (USDA) that prohibits meatpackers from engaging in certain anticompetitive behavior.
"This is truly unprecedented for Congress to kowtow to the meatpackers' self-interests by voting to undermine our nation's rulemaking procedures and by holding meatpackers harmless even when they engage in anticompetitive practices that put independent U.S. cattle producers out of business and increase prices for consumers.
"Competition is the best form of regulation and the Justice Department is supposed to preserve competition by preventing mergers that reduce competition through the creation of monopolies. Unfortunately we do not have a Justice Department that is capable of doing its job, which leaves consumers and producers vulnerable to abusive market power because there is neither sufficient competition nor adequate regulations to keep the highly concentrated, multinational beefpackers in check.
"American citizens have been terribly wronged by the combination of the Justice Department's refusal to preserve competition through merger enforcement and Congress' refusal to properly regulate the marketplace now that competition is so sorely lacking. This is a recipe for a wholesale corporate takeover of the U.S. meat supply chain," concluded Bullard.
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