Over 80 groups worry over proposed Tyson-Hillshire merger
Today, a coalition of 82 farm, ranch, consumer, rural and faith-based groups sent a letter demanding that the U.S. Department of Justice extend its review of the proposed Tyson Foods (Tyson) takeover of Hillshire Brands, Co. (Hillshire). The proposed merger would join the largest U.S. meat and poultry company, Tyson, with the 11th largest meat company, Hillshire, and would substantially undermine competition in the pork processing and hog purchasing sectors, disadvantaging farmers and consumers and undermining rural communities.
“Fewer buyers of hogs and sows result in a less competitive market for family farmers,” said Roger Johnson,president of National Farmers Union. “The rapid consolidation of market power in the hands of just a few pork processors resulted in the loss of more than 90 percent of all hog farms since 1980. Tyson’s takeover of Hillshire certainly warrants further investigation by the Department of Justice and should be stopped. It’s time for the Justice Department to enforce our anti-trust laws.”
Tyson won a protracted and expensive bidding war to initiate the hostile takeover of Hillshire. The Justice Department reviews hostile takeovers on an accelerated 14-day timeline, rather than the typical 30-days to consider a more thorough merger review. The letter notes that the complexity of the proposed merger warrants a much more comprehensive review because of Tyson’s significant hog and sow purchasing and marketing and because the proposed merger would enable Tyson to undermine Hillshire’s sausage and lunchmeat rivals by disrupting their access to pork supplies. Tyson’s substantial and largely opaque role in private label processed pork production is another aspect of this deal that warrants further scrutiny from regulators.
“Consumers have witnessed an onslaught of food company mergers over the past few years that reduced consumer choices and contributed to higher grocery store prices,” said Food & Water Watch executive director Wenonah Hauter. “The Justice Department should not rubber stamp a $9 billion hostile takeover by America’s biggest meat company that is not in the best interests of consumers or farmers.”
The proposed merger strengthens Tyson’s grip on all livestock producers. It would give the company broader control of the entire hog production sector by combining Tyson’s breeding operations, its hog and sow marketing business, and its slaughter capacity with Hillshire’s sow and boar packing plants, which would give it greater leverage over hog farmers to push down the prices they receive for their market hogs and cull sows and boars. The proposed merger also would improve Tyson’s ability to pit all livestock producers against one another by manipulating the supply of chicken to undermine the consumer demand for beef or pork and thus lower the prices cattle and hog producers receive.
“Studies confirm that beef and pork are protein substitutes and when dominant meatpackers like Tyson have control over each, they can readily pit one commodity against another to maximize their shareholder profits at the expense of U.S. livestock producers,” said R-CALF USA CEO Bill Bullard.
The food and agribusiness sectors are already excessively consolidated, but there has been an accelerated wave of agribusiness and food mergers over the past 18 months that threatens to accelerate the tight monopolistic control over the entire food and farm sector. The letter concludes, “The proposed merger would significantly impair competition throughout the hog and processed pork marketplace, harming farmers, consumers, rival processors and rural communities. The Department of Justice must not grant an early termination of the merger review.”
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