Smithfield Goes to the Hogs
The Justice Department's Antitrust Division announced that it had closed its investigation of the deal. In a news release, the agency said the merger would not harm consumers, farmers or competition.
Officials from Smithfield Foods and Premium Standard Farms did not return phone calls late Friday afternoon.
Smithfield Foods announced its plan to acquire Premium Standard, which is based in Kansas City, Mo., in September . Smithfield is the nation's largest hog producer and pork processor; Premium Standard ranks second in production and sixth in processing.
With the deal, Smithfield will control about 20% of the nation's hogs.
The proposal drew a torrent of criticism from farmers groups, Midwestern senators and the New York Times' editorial board, which predicted "fewer markets for farmers and fewer choices for consumers."
The Justice Department, however, said in its news release Friday that farmers will have "competitive alternatives that would deter the merged firm from lowering prices paid to the farmers."
Consumers will be protected, the agency said, because of "a large number of pork packers - Tyson, Swift, Excel/Cargill, Hormel and Seaboard Foods - that compete on a national basis against Smithfield and Premium Standard Farms in the sale of fresh and processed pork."
The federal government's heightened scrutiny of the deal gave critics hope it would be short-circuited.
In November , the Justice Department issued a "second request for information," a rare procedure that required Smithfield to submit more than 1 million pages of documents. Then, in March , the government announced that it would take an additional month to review the deal.
"This indicates that the request for further information was just that," said Carl Tobias , a law professor at the University of Richmond. "It wasn't necessarily an indication of any denial or of much further questioning."
The decision, he said, reinforces his impression that the Bush administration "continues to be receptive to mergers. Of course, the Justice Department has a lot of fish to fry right now."
From the May 9, 2007, Prepared Foods e-Flash