Thursday, July 4, 2013

States oppose Horizon Milling deal


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."