U.S. Gets No Respect|From Chicken Giants


     HARRISONBURG (CN) – In an antitrust complaint written in high dudgeon, Uncle Sam says Arkansas-based George’s Foods completed a deal to buy a Tyson’s chicken processing plant without responding to the government’s civil investigative demands.

      , and without notice – the day after the government told the chicken kings “that the United States had serious concerns about the transaction and had requested to be notified prior to the parties’ closing the transaction.”
     The Department of Justice’s Antitrust Division sued George’s Foods, George’s Family Farms and George’s Inc., all of Springdale, Ark., in Federal Court.
     Uncle Sam says George’s acquisition of Tyson’s chicken processing plant in Harrisonburg, Va., will reduce competition for the services of broiler chickens, and for the services of farmers who raise the birds.
     The timing of the deal clearly irritated the Antitrust Division.
     “The United States learned about the transaction on or about March 18, 2011, when Tyson and George’s publicly announced George’s intent to buy Tyson’s Harrisonburg chicken processing complex,” the complaint states. “The United States subsequently opened an investigation into the proposed deal, and issued Civil Investigative Demands (‘CIDs’) on April 18, 2011, seeking information on the potential competitive effects of the acquisition and George’s proposed business justifications for purchasing the plant. After serving the CIDs, the United States engaged in numerous discussions with the parties to seek the production of relevant information as quickly as possible. These discussions were continuing at the close of business on Friday, May 6, 2011. On Saturday, May 7, 2011, without any notice to the United States and before responding to the CIDs, George’s and Tyson entered into an asset purchase agreement and simultaneously closed the transaction. The parties undertook this action even though they knew that the United States had serious concerns about the Transaction and had requested to be notified prior to the parties’ closing the transaction.”
     The Harrisonburg plant can process 32 million chickens per year, and will give George’s control of 43 percent of the chicken processing capacity in the region, according to the complaint. Pilgrim’s Pride is the only other regional competitor, but won’t have the capacity to compete.
     “The growers’ ability to switch to a competing processor has been an important competitive restraint on processors. Elimination of Tyson as an alternative buyer will allow George’s unilaterally to decrease prices or degrade contract terms to farmers for grower services in that region,” the government says.
     Uncle Sam seeks an injunction and “divesture of such assets and interests sufficient to restore competition in the Shenandoah Valley.”

%d bloggers like this: