The United States Department of Justice and several US state attorneys general have filed a lawsuit to block the formation of what was proposed to become the largest beef processing company in the US.
The DOJ said it had filed a civil anti-trust lawsuit in US District Court in Chicago to block the proposed acquisition of National Beef Packing Company, the nation's fourth-largest beef packing company, by Brazilian-owned JBS SA US.
The federal lawsuit is not challenging the JBS acquisition of Smithfield Beef Group, Inc.
JBS currently is the third-largest US beef packer following it acquisition of Swift Foods Co. in 2007, and the acquisition of National Beef would catapult the company to the top spot.
The Department said that the proposed deal would result in lower prices paid to cattle suppliers and higher beef prices for consumers.
The Attorneys General of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming are joining the Department's lawsuit.
Today's DOJ statement reported the acquisition of National Beef would give JBS the ability to slaughter more than 40,000 head of cattle per day - or more than one-third of US fed cattle packing capacity - and annual sales of more than $US14 billion.
"The combination of JBS and National will likely lead to grocers, food service companies and ultimately American consumers paying higher prices for beef," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division.
"It will also lessen the competition among packers in the purchase of cattle that has been critical to ensuring competitive prices to the nation's thousands of producers, ranchers and feedlots."
The Department said that JBS's acquisition of National would substantially restructure the beef packing industry, eliminating a competitively significant packer and placing more than 80pc of domestic fed cattle packing capacity in the hands of three firms: JBS, Tyson Foods Inc., and Cargill Inc.
The Department concluded that the acquisition would lessen competition among packers in the production and sale of USDA-graded boxed beef nationwide.
The Department also concluded that JBS's acquisition of National would lessen competition among packers for the purchase of fed cattle – cattle ready for slaughter – in the High Plains, centered in Colorado, western Iowa, Kansas, Nebraska, Oklahoma and Texas, and the Southwest.
In acknowledging the lawsuit, Steve Hunt, chief executive officer of US Premium Beef, LLC, said: "We are disappointed that the DOJ does not recognise that this transaction is pro-competitive and we plan to vigorously contest the DOJ's attempt to block it."
John R. Miller, CEO of National Beef, said: "This transaction will bring tremendous value to our customers and other stakeholders through cost savings and other efficiencies, as well as increase the depth and reach of our industry-leading programs that deliver better value to both cattle producers and beef consumers.
"We will not allow our disappointment with the DOJ's action to distract us from our continued focus on serving the needs of our customers."
US Premium Beef, LLC is the majority owner of National Beef Packing Company, LLC, a leading US beef processor.
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