Source: http://www.justice.gov/atr/cases/f239500/239578.htm
Timestamp: 2014-10-20 13:15:54
Document Index: 1425646

Matched Legal Cases: ['§ 18', '§ 25', '§ 18', '§ 26', '§ 18', '§ 22', '§ 1391', '§ 22']

Amended Complaint : U.S. and Plaintiff States v. JBS S.A. and National Beef Packing Company, LLC
UNITED STATES OF AMERICA, STATE OF ARIZONA, STATE OF COLORADO, STATE OF CONNECTICUT, STATE OF IOWA, STATE OF KANSAS, STATE OF MINNESOTA, STATE OF MISSISSIPPI, STATE OF MISSOURI, STATE OF MONTANA, STATE OF NEW MEXICO, STATE OF NORTH DAKOTA, STATE OF OHIO, STATE OF OKLAHOMA, STATE OF OREGON, STATE OF TEXAS, and STATE OF WYOMING, Plaintiffs, v. JBS S.A. Av. Marginal Direita do Tiete, 500 Vila Jaguara
São Paulo - SP, Brazil 05118-100, and NATIONAL BEEF PACKING COMPANY, LLC 12200 North Ambassador Drive, 5th Floor
Kansas City, MO 64163, Defendants. )
) Civil Action No. 08-CV-5992 Judge Bucklo Filed: 11/07/2008 AMENDED COMPLAINT The United States of America, acting under the direction of the Attorney General of the United States, and the states of Arizona, Colorado, Connecticut, Iowa, Kansas, Minnesota, Mississippi, Missouri, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, and Wyoming ("Plaintiff States"), acting under the direction of their respective Attorneys General or other authorized officials, bring this civil action to enjoin the acquisition of Defendant National Beef Packing Company, LLC ("National") by Defendant JBS S.A. ("JBS") and complain and allege as follows: 1. JBS, based in Brazil, is the world's largest beef packer. In mid-2007, JBS acquired Colorado-based Swift Foods Company, then the third-largest beef packer in the United States, with plants in Texas, Nebraska, Colorado, and Utah. JBS is in the process of acquiring Smithfield Beef Group, Inc., the fifth-largest beef packer in the United States, with packing plants in Arizona, Wisconsin, Michigan, and Pennsylvania. 2. National is the fourth-largest beef packer in the United States. National operates two major beef packing plants in Kansas and a third plant in southern California. Like JBS's plants in the United States, National's plants process primarily fed cattle, which are steers and heifers raised and fed for the production and sale of high quality beef products, including beef graded as "Choice," "Select" or "Prime" by the United States Department of Agriculture (hereinafter "USDA-graded beef"). 3. JBS's proposed acquisition of National, its third major acquisition since 2007, would complete a fundamental restructuring of the United States beef packing industry. The acquisition would increase JBS's share of fed cattle packing capacity from close to 20% to approximately 35% and eliminate one of three large packers that compete with JBS. Post merger, over 80% of the nation's fed cattle packing capacity would be controlled by a three-firm oligopoly — JBS, Tyson Foods, Inc. ("Tyson") with approximately 25-30%, and Cargill, Inc. ("Cargill") with approximately 20-25% share. 4. Competition among packers to purchase fed cattle is critical to ensure that the nation's thousands of cattle producers, ranchers, and feedlots receive competitive prices for the fed cattle that they produce, feed, and market. In 2007, packers purchased more than 27 million fed cattle at a cost of close to $30 billion. Defendants plus Tyson and Cargill together purchased over 85% — nearly 24 million — of these cattle. 5. Competition among fed cattle packers to produce and sell USDA-graded beef products, primarily as wholesale "boxed" beef, has benefitted grocers, food service companies and ultimately United States consumers. In 2007, packers in the United States produced and sold more than $20 billion of USDA-graded boxed beef products. 6. The proposed transaction would eliminate head-to-head competition between the merging parties and likely would diminish the vigor with which JBS and the two other significant packers each will compete to purchase fed cattle and produce and sell USDA-graded boxed beef, making interdependent or coordinated conduct among these large packers more likely. As a result, cattle producers, ranchers and feedlots likely will receive lower prices for their cattle. Similarly, grocers, food service companies and ultimately United States consumers likely will pay higher prices for USDA-graded beef. Accordingly, JBS's acquisition of National likely will substantially lessen competition in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18. I. JURISDICTION AND VENUE 7. This action is filed by the United States under Section 15 of the Clayton Act, as amended, 15 U.S.C. § 25, which invests the Court with jurisdiction to prevent and restrain violations of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18. Each of the Defendants, themselves or through wholly-owned subsidiaries that they control, purchase fed cattle and sell USDA-graded boxed beef products in the flow of interstate commerce, and their activities substantially affect interstate commerce as well as commerce in each of the Plaintiff States. 8. The Plaintiff States bring this action under Section 16 of the Clayton Act, 15 U.S.C. § 26, to prevent and restrain the violation by the Defendants of Section 7 of the Clayton Act, 15 U.S.C. § 18. The Plaintiff States, by and through their respective Attorneys General, or other authorized officials, bring this action in their sovereign capacities and as parens patriae on behalf of the citizens, general welfare and economy of each of their states. 9. Defendant National transacts business and is found in the Northern District of Illinois, through, among other things, selling beef products to customers in this District. Venue is proper over National in this Division within the Northern District of Illinois within the meaning of 15 U.S.C. § 22. Venue is proper in the Northern District of Illinois for Defendant JBS S.A., a Brazilian corporation, under 28 U.S.C. § 1391(d). Alternatively, venue is proper over JBS S.A. in this Division within the Northern District of Illinois under 15 U.S.C. § 22 because JBS S.A. transacts business in this District through wholly-owned subsidiaries, over which JBS S.A. exercises dominant control, that sell beef to customers in this District. II. THE DEFENDANTS AND THE PROPOSED TRANSACTION 10. JBS, a corporation organized under the laws of Brazil, is the world's largest beef packer. JBS's wholly-owned subsidiary, JBS USA, is currently the third-largest beef packer in the United States. JBS's beef packing plants in Cactus, Texas; Grand Island, Nebraska; Greeley, Colorado; and Hyrum, Utah have a combined slaughter capacity of approximately 20,000 head of cattle per day and generate over $6 billion in beef sales annually. Through the acquisition of Smithfield Beef Group, the fifth-largest United States beef packer, JBS will obtain additional packing plants in Tolleson, Arizona; Green Bay, Wisconsin; Plainwell, Michigan; and Souderton, Pennsylvania, increasing its total slaughter capacity to approximately 27,000 head per day. 11. National is the nation's fourth-largest beef packer, with annual beef sales of over $5 billion and a packing capacity of approximately 14,000 head of cattle per day. National operates three beef packing plants located in Liberal, Kansas; Dodge City, Kansas; and Brawley, California. National is majority-owned by U.S. Premium Beef, LLC, a Delaware limited liability company partially owned by cattle producers. 12. JBS agreed to purchase 100% of National shares for approximately $560 million pursuant to an agreement dated February 29, 2008. At closing, JBS will assume the debt and other liabilities of National, resulting in an enterprise value of approximately $970 million. III. TRADE AND COMMERCE A. The Beef Packing Industry is Centered in the High Plains 13. The overwhelming majority of fed cattle slaughter in the United States occurs in the High Plains, a region often referred to as the "Beef Belt," which is centered in Colorado, western Iowa, Kansas, Nebraska, Oklahoma, and Texas. Approximately three-quarters of the fed cattle packing capacity in the United States is found in this region, along with close to 80% of all cattle on feedlots. 14. Both National and JBS operate significant packing plants in the High Plains area. National's plants in Liberal, Kansas and Dodge City, Kansas are among the largest and most profitable beef packing plants in the nation. Located in the center of the High Plains region, the National plants compete with JBS's Grand Island, Nebraska plant to the