ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
Department of Justice
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Poultry Merger Challenge

by | May 13, 2011 | , ,

by Gregory E. Heltzer and Carrie G. Amezcua

On May 10, the U.S. Department of Justice (DOJ) filed a civil lawsuit against George’s Inc. to block its $3M acquisition of Tyson  Foods Inc.’s, Harrisonburg, Virginia chicken processing plant, showing that deals of all sizes face scrutiny.  This case also continues the trend of challenges to non-reportable transactions by both the DOJ and FTC, as well as the DOJ’s current focus on the agriculture sector. It is also notable because the DOJ is alleging that the merger leads to monopsony power, a relatively rare allegation, but one that is increasingly used in challenging deals in the agriculture business.

The DOJ began investigating the acquisition when it was announced in mid-March, and issued Civil Investigative Demands to the parties on April 18, 2011.  Despite their awareness of the DOJ’s concerns and ongoing data and document productions, the parties consummated the deal.

George’s and Tyson are two of only three chicken processors in the Shenandoah Valley.  Chicken processors process and distribute "broilers," which are chickens raised for meat products.  The processors compete for contracts with growers, who care for and raise chicks from the time they are hatched until the time they are ready for slaughter.
 
In its complaint, the DOJ alleges that the relevant product market is the "purchase of broiler grower services from chicken farmers."  The DOJ then asserts that, following the proposed merger, chicken farmers would have only a single processor to sell their growing services to – in part because the only other processor in the 50-75 mile range, Pilgrim’s Pride, is at capacity. The DOJ alleges that the consolidation would not only harm grower’s contract prices but also lead to inferior contract terms on other, non-price factors.  The DOJ argues that the relevant geographic market is limited to the Shenandoah Valley because of transportation costs for feed and live birds.

The full complaint can be found on the DOJ website: https://www.justice.gov/atr/cases/f270900/270983.pdf.



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U.S. Dept. of Justice and Germany’s FCO Permit Patent Acquisition With Modifications

by | Apr 22, 2011 | , ,

by Stefan M. Meisner

Yesterday, the U.S. Department of Justice announced that CPTN Holdings, LLC,  a joint venture owned equally by Microsoft Corp., Apple, Inc. , Oracle Corp., and EMC Corp,  has agreed to modify its agreement to acquire certain patents from Novell, Inc. in order to allay antitrust concerns raised by the transaction.  The Department had expressed concerns that the original deal would threaten the ability of open source software to innovate and compete in critical software markets.  The modifications to the deal will allow it to go forward, but the Department emphasized that it will continue to monitor distribution of the patents to ensure continued competition. The transaction also received antitrust clearance from Germany’s Federal Cartel Office.  The German and American authorities cooperated closely on the matter, aided by waivers from the parties that allowed information sharing between the two agencies.  Regulators are increasingly attuned to the effects of intellectual property transactions on competition.

For more information on the CPTN Holdings, LLC transaction, you may find the following links useful:

Department of Justice Press Release
https://www.justice.gov/atr/public/press_releases/2011/270086.htm

Law 360 article
https://www.law360.com/competition/articles/240355?utm_source=newsletter&utm_medium=email&utm_campaign=competition



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The Top Five (Avoidable) Antitrust Traps in M&A Transactions

by | Feb 28, 2011 | , ,

by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine

In M&A transactions, early involvement of antitrust counsel is essential to avoid unnecessary expense, delay and antitrust risks.  Failure to involve antitrust counsel early on in the process may not only jeopardize the parties’ ability to obtain antitrust clearance, but it can also give rise to potential exposure for independent antitrust violations and deal risk.  This article discusses five avoidable antitrust pitfalls to keep in mind early in any transaction planning process.

To read the full article, click here. 



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Antitrust and Agriculture: Summary of DOJ/USDA Workshops and New Article on Capper-Volstead

by | Jan 14, 2011 | ,

by Greg E. Heltzer, Carrie G. Amezcua and Jennifer L. Westbrook

The DOJ and USDA just completed a series of five workshops on competition in the agriculture industry.  The two agencies have a renewed their focus on competition in this industry and have promised more activity in this area.  The highlights from each of the workshops is described below.

An overview of all five workshops:
Issues of Concern to Farmers, March 12, 2010, Iowa

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • There was discussion about concentration in the seed industry and lack of choice among seed trait companies.  Also, farmers voiced concern about patents that nearing expiration where there are no generics yet in the pipeline.  (Subsequent to this workshop Monsanto announced it would pay for all regulatory approvals of Round Up Ready soybean patent through 2021 even though the patent expires in 2014).
  • The discussion from pork and livestock farmers centered on fairness, transparency and increased enforcement of existing laws such as the Packers and Stockyards Act.

Poultry Industry, May 21, 2010, Alabama

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • Mr. Holder announced the launch of the Agriculture Competition Joint Task Force, which is comprised of individuals from the DOJ and USDA.
  • There was discussion about the fairness of poultry contracts and transparency in the industry.
  • There were also comments on the lack of concentration of poultry processing companies, which reduces the choice farmers have.

Dairy Industry, June 25, 2010, Wisconsin

  • Opening statements and roundtable remarks by Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack. (AG Eric Holder did not attend).
  • There was discussion about the gap between the prices consumers pay (relatively high) and prices that dairy farmers are paid by processors (relatively low).  The farmers are getting squeezed and having to sell below cost.
  • Consolidation in grocery retailing and the price pressure exerted by large retailers on dairy coops, as well as consolidation in dairy processors, were cited as a cause of low prices to farmers.

Livestock Industry, August 27, 2010, Colorado

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • The workshop focused on issues regarding the ability of cattle and hog producers to earn sustainable returns.
  • There was discussion about whether reducing the market power of the packers and increasing bid competition for cattlemen’s animals would raise prices that cattlemen could obtain.
  • There was also discussion about how concentration of packers and concentration among retail grocers negatively affects prices producers can get for their livestock.

Margins, December 8, 2010, Washington, D.C.

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • The workshop focused on margins at each [...]

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