About a dozen states have joined an investigation launched
by the United States Justice Department into a proposed deal to add ConAgra
Foods to Horizon Milling which is already a joint venture between Cargill and
CHS Inc., a farmer-controlled co-operative.
Trust-busters say Horizon is simply another way to
continue price-fixing that brought previous convictions in U.S. courts.
Oklahoma is the leader of the states where wheat is a
major crop.
Horizon announced in December, 2011, that it has a 27-acre
site near Guelph and intends to build a new flour mill within three years.
In Ontario it faces competition from New Horizons of Hanover
which is controlled by Parrish and Heimbecker. It recently bought Dover Mills
which is another significant flour miller in Ontario.
Oklahoma and the other states are concerned that the new
Cargill/CHS/ConAgra venture, to be called Ardent Mills, will have the power to
illegally push down prices received by farmers for their wheat, the sources
said.
The other major player in the wheat milling business is
Archer Daniels Midland, which has about 17 per cent of U.S. wheat milling
capacity, according to the American Antitrust Institute, a non-profit group
that advocates for competition in business.
AAI said in an April letter to the Justice Department that
the proposed joint venture “raises potentially significant competitive
concerns.”
Agriculture, already a fairly concentrated market, has a
history of price-fixing, said Thomas Horton, a veteran Justice Department
litigator who now teaches antitrust courses at the University of South Dakota
School of Law.
“It’s a very bad deal. To me, it’s just a plan to
implement a price-fixing conspiracy through what’s called a joint venture,”
Horton said.
ConAgra
spokeswoman Becky Niiya added that assuming the joint venture is approved, it “will
continue to face significant competition."
