The United States of America claimed in a complaint on Tuesday that allowing Zen-Noh Grain Corp. (ZGC) to purchase elevators from Bunge North America Inc. would constitute anticompetitive activity, and asked the District of Columbia District Court to stop the planned acquisition.
The plaintiff explained that the primary crops in the country are corn and soybeans, and that about one quarter of the grains produced in the United States in 2020 were exported. The complaint explained that in order to have a fair return, farmers need competition between companies, and that allowing ZGC to acquire 48 grain elevators from Bunge would be detrimental to this competition.
Reportedly, the purchase agreement between the defendants, ZGC and Bunge, was entered on April 21, 2020. The purchase of grain elevators, a majority of which are operating and some which are not, would cost ZGC about $300 million.
Allegedly, the acquisition would be detrimental to farmers, which are more likely to sell grain to elevators closer to their farms, which will then sell the grain to larger elevators which are further away. ZGC and Bunge each own elevators which are primarily located either along a navigable river or by a rail terminal for ease of transportation.
“Today, ZGC, along with its affiliate CGB Enterprises Inc., … competes against Bunge to purchase corn and soybeans at numerous U.S. grain elevators and at their port elevators. In particular, in some areas along the Mississippi and Ohio Rivers where the Defendants operate competing river elevators, farmers have few – if any – alternative purchasers for their grain. The acquisition will eliminate competition between ZGC and Bunge in those locations; as a result, many U.S. farmers are likely to receive lower prices and poorer quality service when seeking to sell their grain,” the complaint alleged.
Both companies reportedly purchase, store, and sell grain. ZGC does not currently own many inland grain elevators, but its affiliate CGB Enterprises does, and supplies corn and soybeans to ZGC for exporting. With the proposed acquisition, ZGC allegedly intends to lease the elevators to CGB for operating, a company which already operates over 100 elevators and is the fifth-largest grain company in the United States in amount of storage.
Reportedly, many of the farmers which sell grain to the elevators involved in the proposed acquisition are areas where the other elevator option is currently owned by CGB. The complaint alleged that the acquisition in multiple areas would create a monopoly for grain purchases in specific areas.
The complaint was brought through Section 15 of the Clayton Act, and the government alleged that if the acquisition is allowed to continue the defendants would be violating Section 7 of the same act. The plaintiff, represented by the U.S. Department of Justice, requested that the court enjoin the defendants from completing the acquisition.
