The way is cleared for JBS, a Brazil company, to buy two more Canadian owned packing plants, including one in Omaha.
On March 26, the U.S. Department of Justice closed its anti-trust investigation of the proposed acquisition of two XL Four Star Beef slaughtering plants. By closing the investigation without taking any anti-trust enforcement action, the Justice Department has blessed JBS' merger proposal, observers say.
When the merger is complete, JBS will have a slaughter capacity in the United States of nearly 28,500 head per day -- making it by far the largest beefpacker in the U.S. as well as the world.
And, JBS is already the largest cattle feeder in the U.S., and as the largest cattle slaughterer, it will control the largest share of the wholesale U.S. beef market, said Bill Bullard of R-CALF USA, a watchdog group of U.S. cattle ranchers.
"It is now clear that the Obama Administration is afraid to interfere with the Brazilian monolith's plan to strip independent cattle producers of a competitive marketplace and to ultimately capture the live cattle supply chain away from independent U.S. cattle producers and feeders,” Bullard said.
Bullard said this is a recipe for a wholesale corporate takeover of the U.S. meat supply chain and monopolization of the meatpacking industry.
In October, JBS bought the XL Foods beef plant in Alberta, Canada, that was at the center of an E. coli outbreak and the largest beef recall in Canada.
The plant slaughtered one-third of the cattle in Canada. It closed in September after the e-coli outbreak, but reopened in December on a reduced capacity, according to a news report on ThePigSite.com. The XL plant once slaughtered about 25,000 bulls a year, but bull slaughter stopped in September and has not resumed there.
JBS also owns a packing plant in a beef plant in northern Utah and under the latest merger, will take over a plant in Nampa, Idaho.
JBS is also the owner of Swift Beef Company, which operates a packing plant in Grand Island.
Bullard: Bush was better
In 2008, the Justice Department under the George W. Bush administration successfully initiated antitrust enforcement to block JBS from acquiring the U.S.’s fourth-largest beef packer, National Beef Packing Co., Bullard said.
It was the first time since the 1920s that the government took an anti-trust action against a meat-packing merger, Bullard said.
"We were hopeful that action signaled the end to decades of lax antitrust enforcement and the beginning of a renewed awareness for the importance of preserving competition for independent cattle producers," Bullard said.
"Competition is the best form of regulation,” he said, “and the Justice Department is supposed to preserve competition by preventing mergers that reduce competition through the creation of monopolies.”