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Tyson-Hillshire deal needs to be scrutinized

August 29, 2014
Senator Chuck Grassley , Dysart Reporter

Senator Chuck Grassley is pressing the Justice Department to heavily scrutinize the proposed acquisition by Tyson Foods of Hillshire Brands.

In a letter sent late yesterday, Grassley said he was concerned about how the merger could increase concentration and decrease competition in the U.S. pork industry. He also said he was concerned about the impact on consumer choice and the price of pork.

"Independent, small producers have been to my office to express their own concern. In particular, they fear that Tyson could engage in the practice of 'tie-in' sales of sows with market hogs, which would put independent producers at a tremendous disadvantage as they look for markets for their sows," Grassley said.

Grassley has worked to empower an agricultural perspective and expertise inside the anti-trust division of the Justice Department to ensure the unique aspects of agriculture are taken into consideration in cases such as this. He is the Ranking Member of the Senate Judiciary Committee which has jurisdiction over anti-trust policy.

A copy of the text of the letter is below.

August 5, 2014

The Honorable William J. Baer

Assistant Attorney General, Antitrust Division

United States Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530

Dear Assistant Attorney General Baer:

I write to express concerns with the proposed acquisition by Tyson Foods of the Hillshire Brands Company. Tyson Foods had $34.4 billion in sales during Fiscal Year 2013 while the Hillshire Brands Company had nearly $4 billion in sales. The estimated value of this transaction is $7.7 billion. I am concerned about how this proposed acquisition could increase concentration as well as decrease competition in the pork industry in the United States. I also am concerned about the impact on consumer choice and the price of pork products.

Independent and small pork producers are concerned with potential abuses related to the practice of "tie-in" sales of sows with market hogs. I have heard concerns that the transaction will result in significantly reduced competition and market access for slaughter sows if certain buying stations are not divested. Specifically, these producers are worried that the transaction will run afoul of Packers and Stockyards Policy Statement 203.19, which governs the conflict of interest rules for packers operating as a livestock dealer or market agency.

I urge the Antitrust Division to thoroughly examine this acquisition to protect competition in the pork industry. In particular, I urge the Antitrust Division to scrutinize the implications of this transaction on the sow market. The proposed Tyson Foods-Hillshire Brands Company combination could reduce the already limited number of buyers for the commodities of small, independent pork producers. Many independent producers and family farmers are concerned about increased vertical integration, expanded packer ownership, exclusive contracting and captive supply. I share these concerns about anti-competitive business practices, reduced market opportunities, and limited choice and higher prices for consumers.

Thank you for your attention to this matter. I look forward to hearing from you soon.


Charles E. Grassley

United States Senator



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