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Feds & 13 States Challenge Merger|Of Country’s Biggest Beef Packers

CHICAGO (CN) - In an antitrust case, the United States and 13 states sued JBS and National Beef Packing to prevent the merger of the world's largest beef packer and the country's fourth-largest. JBS, of Brazil, bought Swift Foods, the U.S.' third-largest beef packer, in 2007 and is buying Smithfield Beef Group, the fifth-largest.

Enough's enough, say the plaintiffs. If this merger goes through, JBS will increase its share of U.S. beef packing from 20% to 35%. At that point, more than 80% of U.S. beef packing will be controlled by "a three-firm oligopoly," JBS, Tyson Foods (25-30%) and Cargill (20-25%).

U.S. beef packers bought more than 27 million cattle in 2007 for more than $30 billion. The defendants, Tyson and Cargill bought more than 85% of them, the complaint states.

The proposed merger would reduce competition, make antitrust collusion easier and more likely, reduce compensation to ranchers and feedlots, and increase prices to consumers, the plaintiffs say. They want the merger enjoined.

Joining the federal government as plaintiffs are Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, and Wyoming.

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