Sen. Grassley Seeks Antitrust Review of Sanderson Acquisition

Aug. 24, 2021
Senator asks Justice Dept. to review purchase by Cargill and Continental Grain Co.

As expected, the acquisition of poultry processor Sanderson Farms by Cargill and Continental Grain Co. is raising antitrust concerns, with Sen. Chuck Grassley of Iowa asking the U.S. Department of Justice to look into the $4.53 billion deal.

"A combined Cargill-Continental Grain-Sanderson Farms would control approximately 15% of the U.S. chicken market. I am concerned that continued mergers and acquisitions in an already concentrated poultry industry will increase consolidation, frustrate competition and reduce marketing options," Grassley wrote to Richard Powers, acting assistant attorney general in the Justice Dept.'s antitrust division.

"I also am concerned about the impact on consumer choice and price of poultry products. I urge the Antitrust Division to thoroughly examine this proposed acquisition to preserve a competitive market in the U.S. poultry industry. I also urge the Antitrust Division to seek input from the Department of Agriculture in its analysis of the proposed transaction and its impact on the poultry market."

The deal was announced on Aug. 9. It would involve Cargill and Continental Grain buying publicly held Sanderson Farms and merging it with Continental's Wayne Farms poultry unit. Sanderson Farms will be the surviving name. but the CEO will be Wayne Farms CEO Clint Rivers. How much each company is contributing and how they will share ownership was not specified.

By our figuring, per the just completed 2021 Food Processing Top 100(c), the merged firm should have sales of about $5.8 billion, which would put it close to the poultry sales of No. 1 Tyson and No. 2 Pilgrim's Pride. Sanderson Farms itself already was No. 3, although a ways back at $3.564 billion.

"As you know, the poultry industry recently has been investigated for conspiring to fix prices and rig bids for chicken products, and pass on the costs to consumers and other purchasers," Grassley's letter continued. "Further, the Antitrust Division should consider whether the proposed acquisition will result in more limited choices of poultry products and higher prices for consumers."

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