Sen. Elizabeth Warren (D-Mass.) and other U.S. lawmakers expressed to the Justice Department (DOJ) on Thursday that an intended merger between chicken producers Sanderson Farms and Wayne Farms “raises significant antitrust concerns,” per reports from Reuters.
In August, Cargill, Inc. and Continental Grain, Co. announced that they intended to buy Sanderson Farms and combine it with the smaller Wayne Farms. Sanderson Farms is the third largest chicken producer in the country, making the deal worth over $4 billion. A significant rise in chicken prices in the last year has led the Justice Department to begin to pursue price-fixing, but Reuters details that “the market shares for the combined company isn’t as large as is usually seen in merger challenges.”
According to reports, the lawmakers detail in their letter that the poultry industry has a documented prior history of “colluding to fix prices for consumers.” They further reasoned that the proposed consolidation between the two chicken producers would leave farmers who raise chickens with potentially just one or two producers to do business with. This pattern, they say, has contributed to the decreasing pay of a typical chicken farmer, which fell more than 6% between 1988 and 2015.
“This mega merger, in a sector already plagued with consolidation and illegal behaviors that harm farmers and consumers alike, represents a new threat to building a competitive agricultural industry,” the letter stated.
Cargill and Continental Grain, who are driving the merger, argue that the merger would introduce a new industry player “which will be in an ideal position to expand options and increase supply for consumers.” In their statement, they added that the company will plan to “pursue new investments to expand its operations, creating new high-quality jobs, and benefiting local communities in seven U.S. states.”
The lawmakers urge the DOJ in their letter to assess the Sanderson-Wayne merger for its potential violation of antitrust laws. Other senators who signed the letter include Senator Cory Booker, Senator Richard Blumenthal, Senator Bernie Sanders, and more. The letter comes after Senator Warren’s previous request for the Justice Department to investigate the impact of price-fixing and consolidation within the poultry industry on consumers and farmers.