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Smithfield - PSF merger kills market competition

by 5m Editor
15 May 2007, at 12:08pm

US - University of Wisconsin law professor Peter Carstensen says he is 'dumbfounded' by the U.S. Department of Justice agreement for pork giant Smithfield Inc.'s acquisition of rival giant Premium Standard Farms (PSF).

It wasn't based on the fact that official sanction of the questionably anti-competitive deal arrived via the late week press "dump," a tiresome Washington trick to announce bad news late Friday in the hope no one will notice.

Nor was he surprised DOJ approved the deal's essentials: Smithfield, the world's largest pork producer and processor with $11 billion in annual sales, could buy the nation's second largest producer and sixth largest processor. After all, he surmised, this administration hasn't seen a mega-buyout or merger it hasn't loved.

"What blew me away, however," Carstensen relates, "is that Justice approved every aspect of the buyout without reservation, especially Smithfield's acquiring Premium's processing plant in North Carolina," its only regional competitor.

"I had thought," he explains, "there's no way Justice could possibly allow only one pork packer in the entire Southeast. But, they approved it all. I was flabbergasted."

There's only one way to read the May 4 action, he continues: "The U.S. Justice Department is killing competition in American agriculture one merger at a time."

The Wisconsin law professor is in a position to make such an indictment. For years, Carstensen and other legal and economic scholars - such as Neil Harl of Iowa State, Ron Cotterill of the University of Connecticut and Michael Stumo of the Organization for Competitive Markets - have fought anti-competitive bigness through academic research, Congressional testimony and, when all else fails, federal lawsuits.

Source: PJStar.com

5m Editor