Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Senator Grassley questions Tyson Foods, Hillshire Brands Co. merger, (Aug 13, 2014)
Organizations Mentioned:Hillshire Brands Co. | Hillshire Brands Company | Tyson Foods | Tyson Foods, Inc.
U.S. Senator Chuck Grassley (R-Iowa) sent a letter to Assistant Attorney General William J. Baer on August 5, requesting that the Antitrust Division thoroughly examine Tyson Foods, Inc.’s acquisition of Hillshire Brands Company, particularly with regard to its effect on competition in the pork industry, its potential influence on consumer choice and the price of pork, and its impact on small, independent pork producers.
The estimated value of the acquisition is $7.7 billion dollars, according to the Senator, who noted that, in Fiscal Year 2013, Tyson had $34.4 billion in sales and Hillshire Brands had nearly $4 billion in sales.
“I am concerned about how this proposed acquisition could increase concentration as well as decrease competition in the pork industry in the United States,” Senator Grassley wrote. “I also am concerned about the impact on consumer choice and the price of pork products.”
Of particular concern was the reaction of independent and small pork producers. “Independent, small producers have been to my office to express their own concern,” Grassley said. “In particular, they fear that Tyson could engage in the practice of ‘tie-in’ sales of sows with market hogs, which would put independent producers at a tremendous disadvantage as they look for markets for their sows.”
The Senator also warned that the Tyson-Hillshire combination “could reduce the already limited number of buyers for the commodities of small, independent pork producers.” In addition, he noted the possibility of increased vertical integration, expanded packer ownership, exclusive contracting, and captive supply. “I share these concerns about anti-competitive business practices, reduced market opportunities, and limited choice and higher prices for consumers,” he said.
“I urge the Antitrust Division to thoroughly examine this acquisition to protect competition in the pork industry,” Grassley requested. “In particular, I urge the Antitrust Division to scrutinize the implications of this transaction on the sow market.”
Grassley is the ranking member of the Senate Judiciary Committee, which has jurisdiction over antitrust policy.
Companies: Tyson Foods, Inc.; Hillshire Brands Company
News: AcquisitionsMergers Antitrust AntitrustDivisionNews