SOURCE: AP/Lawrence Jackson
David Balto, Senior Fellow at the Center for American Progress.
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Mr. Chairman, Ranking Member Hatch, and other distinguished members of the Antitrust Subcommittee of the Antitrust Subcommittee of the Senate Judiciary Committee, I want to thank you for giving me the opportunity today to speak about the competitive problems that arise from increased concentration in agricultural markets and, specifically, on the competitive impact of JBS/Swift’s proposed acquisitions of Smithfield and National.
My testimony today is based on over a quarter century as an antitrust practitioner, the majority of which was spent as an enforcer in the Antitrust Division of the Department of Justice, and in several senior management positions, including Policy Director at the Federal Trade Commission. I currently regularly practice before both the agencies, and frequently represent consumer groups, producers, and other service providers, raising concerns about mergers under investigation by the Antitrust Division or the FTC.
My message today is a simple one: Based on the preliminary public facts, JBS’ proposed acquisition of Smithfield and National poses very serious competitive concerns and will likely harm competition in the purchase of cattle. Today’s hearing and continued monitoring by this Committee are vital to assuring a competitive marketplace in agricultural markets. Unfortunately, the standards currently applied by the Antitrust Division of the DOJ have eroded and we are in a period of particularly lax merger antitrust enforcement. The Antitrust Division has not been to federal court to enjoin a merger in five years. They have not challenged an agricultural processing merger in almost a decade.
My testimony is divided into three parts. I begin by providing the framework of the competitive analysis of the merger. This merger will reduce the number of national beef processors from five to three. Permitting the consummation of these acquisitions will lead to lower prices to cattle producers, and, ultimately, higher prices to consumers. Second, I analyze whether the merger may on balance benefit consumers perhaps from increased buying power or the potential efficiencies of the merger. I conclude that those efficiencies are unlikely to be a substantial counterweight to the potential anticompetitive effects of the merger. Finally, I close with some general observations about how to improve the approach to agriculture competition issues.
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David Balto is a Senior Fellow at American Progress focusing on competition policy, intellectual property law, and health care.