Home Impact producer EXCLUSIVE Senator Warren and others urge US Justice Department to oppose Sanderson chicken deal if antitrust violation found

EXCLUSIVE Senator Warren and others urge US Justice Department to oppose Sanderson chicken deal if antitrust violation found

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WASHINGTON, Feb 17 (Reuters) – Senator Elizabeth Warren, backed by a dozen other U.S. lawmakers, has told the Justice Department that a proposed merger of chicken producer Sanderson Farms with small rival Wayne Farms “raises significant antitrust concerns”.

Commodities trader Cargill Inc and Continental Grain Co said in August they would buy Sanderson Farms (SAFM.O), the third-largest chicken producer, and combine it with Continental’s Wayne in a deal to worth about $4.53 billion. Read more

Chicken prices rose sharply in the previous year and the Department of Justice continued to price-fix the sector, but the combined company’s market shares are not as large as is usually seen in merger disputes. Read more

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In the letter, sent 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 set prices for consumers.

They said that due to the consolidation of chicken farmers who do the slaughtering, farmers raising chickens may only have one or two farmers in a particular region to do business with. A typical chicken farmer’s salary dropped more than 6% between 1988 and 2015, Warren said.

“This mega merger, in an industry already plagued by consolidation and illegal behavior that harms farmers and consumers, poses a new threat to building a competitive agriculture industry,” the lawmakers wrote. “We respectfully urge the DOJ to review the proposed Sanderson-Wayne transaction to determine whether it violates antitrust laws, and the DOJ should oppose the merger if it does.”

Cargill and Continental Grain said in a statement that the planned deal would create a new player “who will be in an ideal position to expand options and increase consumer offerings.”

“This new company plans to pursue new investments to expand its operations, create new, high-quality jobs and benefit local communities in seven U.S. states,” they said in a statement.

In addition to Warren and Jones, among the signatories of the letter were Democratic Senators Cory Booker and Richard Blumenthal, Independent Senator Bernie Sanders and Democratic Representatives David Cicilline, Hank Johnson and Katie Porter.

In November, Warren had called on the Justice Department to investigate the impact of price-fixing and consolidation in the poultry sector on consumers and farmers. She had also urged the department’s antitrust division to look “with suspicion” at any major mergers in the industry after Cargill and Continental announced the Sanderson deal in August. Read more

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Reporting by Diane Bartz; Editing by Leslie Adler and Chizu Nomiyama

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