Letter to Michael Mukasey, Attorney General, Re: Investigate Meat Packing Merger

Press Release

Enzi, Barrasso push Justice Dept. to investigate meat packing merger

U.S. Senators Mike Enzi and John Barrasso, both R-Wyo., pushed the U.S. Department of Justice for strict oversight of the proposed merger of three of the largest national meat packing companies. The Senators stressed the importance for Attorney General Michael Mukasey to scrutinize the merger proposal to ensure a free and fair marketplace.

"The meat packing industry has become increasing consolidated, reducing market opportunities for Wyoming ranchers," the Senators wrote in a letter to Mukasey. "In the face of this market trend, the proposed merger of three of the five major packing companies in the U.S. calls for careful review."

"This proposed acquisition will create the largest meat processing company in the world. The company will also control the largest cattle feeding operation in the United States. It is imperative that a full review of the JBS acquisition include consideration of these factors."

"Competition is the cornerstone of a free-market economy. This proposed merger hearkens back to an era when trusts smothered the market and put countless smaller entrepreneurs out of business," said Senator Enzi. "It's important to ensure the integrity of the American marketplace. On behalf of Wyoming, we request careful review of the proposed merger to ensure that our producers' livelihoods will not be harmed."

"This merger proposal affects everyone from ranchers to grocery store customers. It's bad economics for one or two corporations to control any market, especially the livestock market," said Senator Barrasso. "That is why we have called on the Department of Justice to do a full review of the merger. We want to make sure that it will not hurt Wyoming producers or consumers."

Full text of the letter is included below.

March 14, 2008

Attorney General Michael B. Mukasey
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Dear Attorney General Mukasey;

We write to encourage your scrutiny of the proposed merger of JBS S.A., National Beef and Smithfield Beef Group. This acquisition represents further consolidation of the U.S. meat processing industry. The competitiveness of this sector is of vital importance to beef and lamb producers across the country, and especially in Wyoming. We urge your agency to carefully consider all aspects of this proposed acquisition before making any judgment.

Livestock markets are dependant upon the coordination of many sectors of the industry. Ranchers raise calves and lambs to sell to livestock feeders. Feeders sell matured animals to meat packers. Packers rely on the wholesale and retail markets to sell their products to consumers. The effectiveness of this market chain is determined by free market competition in every sector. In recent years, the meat packing industry has become increasing consolidated, reducing market opportunities for Wyoming ranchers.

In the face of this market trend, the proposed merger of three of the five major packing companies in the U.S. calls for careful scrutiny. We request that your agency consider the effects of this proposal on livestock producers. Many producers have very limited options to sell their cattle. Collusion between packing plants in any one area of the country could significantly depress prices and damage livestock markets. Within your agency's duty to oversee corporate mergers, please consider geographic, market, and price effects on the livestock industry.

This proposed acquisition will create the largest meat processing company in the world. That company will also control the largest cattle feeding operation in the United States. The feeding and meat processing sectors of the beef industry are inextricably linked. It is imperative that a full review of the JBS acquisition include consideration of these factors.

We appreciate your duty to safeguard American producers and consumers from anti-competitive practices. In your review of the JBS merger proposal, please carefully consider the implications for Wyoming livestock producers.

Thank you for your consideration,

Senator Mike Enzi

Senator John Barrasso

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