Antitrust Experts, Consumer Group Dismiss Flour Milling Merger Divestiture Proposal as Inadequate

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American Antitrust Institute and Food & Water Watch Continue to Urge DOJ to Block ConAgra-Cargill/CHS Horizon Milling Joint Venture

WASHINGTON, D.C. February 18, 2014 — The American Antitrust Institute (AAI) and Food & Water Watch today reiterated their independent calls for the U.S. Department of Justice (DOJ) to reject any divestiture proposals and instead block the proposed joint venture between ConAgra and Cargill/CHS’s Horizon Milling wheat flour milling operations. The united announcement by the AAI and Food &Water Watch comes on the heels of ConAgra’s announcement that the companies are purportedly willing to divest four of their flour mills, a proposal the AAI and Food & Water Watch call “inadequate.”

It is long past time for federal antitrust regulators to stop rubber-stamping these food mega-mergers,” said Food & Water Watch Executive Director Wenonah Hauter. “The paltry divestment offer by ConAgra and Cargill only rearranges the deck chairs on a titanic merger and leaves consumers and farmers vulnerable to unfair pricing across the country.”

In a letter to the DOJ, the AAI and Food &Water Watch noted that the proposed divestiture of four flour mills would not prevent the joint venture from raising prices to consumers or lowering prices paid to wheat growers nationwide. “Four mill divestitures would not come remotely close to remedying the competitive and consumer harm in markets across the U.S.,” said AAI Vice President Diana Moss. The letter explains that the joint venture would put the U.S. wheat flour supply chain essentially under the control of two firms – ConAgra-Horizon Milling and Archer Daniels Midland (ADM). “This is a losing proposition for competition and the American consumer,” Moss stated.

The proposed divestiture does little to address the overwhelming market power of the combined ConAgra-Horizon Milling flour milling operation. The resulting firm would be twice the size of the next largest competitor, ADM, and would have disproportionate market power when buying wheat and selling flour. The AAI and Food & Water Watch had each provided the DOJ with an extensive analysis describing the anti-competitive and anti-consumer impacts of the proposed deal in April 2013.

 Even after selling one mill in Minnesota, the ConAgra-Horizon Milling joint venture would still control half the flour mills in the state, a key destination for wheat grown in the Dakotas. Much of the wheat-growing belt would not benefit from the proposed divestitures. The two companies would still control more than half the flour mills between Omaha, Denver and Wichita. Nor would the proposed divestiture change the stranglehold the proposed joint venture would have over food manufacturers, bakeries and even pizza parlors. In the Northeast, the two companies control five out of eight flour mills between eastern Pennsylvania and New England.

News Source : Antitrust Experts, Consumer Group Dismiss Flour Milling Merger Divestiture Proposal as Inadequate

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