Antitrust Lawyer Blog Commentary on Current Developments

DOJ Asked by NGOs to Block Milling Companies’ Merger

On February 18, 2014, the American Antitrust Institute (“AAI”), together with the Food & Water Watch reiterated calls for the Department of Justice (“DOJ”) to block the planned merger of the milling activities of ConAgra-Cargill, CHS and Horizon Milling into a new joint-venture called Ardent Mills.  According to the complainants, the merger would effectively concentrate the U.S. milling industry into the hands of two companies—Ardent and Archer Daniels Midland (“ADM”)—and eliminate competition in the milling industry.  As a result, farmers are likely to receive depressed prices for their harvest, while bakers and consumers would face higher prices, according to the complainants.

In a move dubbed as “winning the Super Bowl… for rural communities” by the governor of Colorado, where the future headquarter of Ardent will be located, the merger would create the largest wheat milling operation in the country, controlling over one third of the total market share.  Both ConAgra and Horizon are planning to divest some assets prior to the merger, with Horizon selling its facility in Los Angeles, and ConAgra selling its facilities in Oakland, California; Saginaw, Texas; and New Prague, Minnesota prior to, or simultaneous with the completion of the merger.

However, AAI and the Food & Water Watch believe those divestitures to be inadequate.  For example, even after selling one mill, Argent will still control half the mills in Minnesota. Argent will also control over half of the flour mills between Omaha, Denver and Wichita.  In the Northeast, Argent will control five out of eight mills between eastern Pennsylvania and New England.  Both the AAI and the Food & Water Watch had provided the DOJ with extensive analysis detailing the potential costs the merger would incur to consumers and farmers.

Despite the opposition, ConAgra and Horizon are still confident on the eventual completion of the merger, with the second quarter of 2014 set as the new deadline.  The merger was originally planned to be completed during the third quarter of 2013.

Mark Ye
202-589-1834
mye@dbmlawgroup.com