National Black Farmers Association

STATEMENT OF THE DEPARTMENT OF JUSTICE ANTITRUST DIVISION ON ITS DECISION TO CLOSE ITS INVESTIGATION OF SMITHFIELD INC.'S ACQUISITION OF PREMIUM STANDARD FARMS INC.

Division Concludes Merged Firm is Not Likely to Harm Competition, Consumers or Farmers

WASHINGTON — The Department of Justice's Antitrust Division issued the following statement today after the Department announced the closing of its investigation of the proposed acquisition by Smithfield Foods Inc. of Premium Standard Farms Inc:

"After a careful investigation of Smithfield's proposed acquisition of Premium Standard Farms, the Antitrust Division determined that the merged firm is not likely to harm competition, consumers or farmers.

"The Division's investigation of the merger of these pork packers and processors focused on fresh and processed pork, the purchase of hogs from farmers, and the purchase of services from farmers who raise hogs owned by the merging parties. Based on the evidence obtained during its extensive investigation, the Division found that the merged firm would continue to face significant competition in the sale of fresh and processed pork from its national competitors Tyson, Swift, Excel/Cargill, Hormel and Seaboard Foods. Additionally, farmers who sell hogs or hog-raising services to the merged firm would have competitive alternatives that would deter the merged firm from lowering prices paid to the farmers. Although this particular acquisition is not likely to harm competition, the Antitrust Division will continue to be vigilant in its enforcement of the antitrust laws with respect to any further proposed consolidation in this area."

Background Smithfield Foods Inc., based in Smithfield, Virginia, is the largest hog producer and the largest pork packer and processor in the United States with annual revenues exceeding $11 billion. Smithfield has pork packing plants in Iowa, South Dakota, Nebraska, Illinois, North Carolina and Virginia.

Premium Standard Farms Inc., based in Kansas City, Mo., is the second-largest hog producer after Smithfield and the sixth-largest pork packer and processor in the United States with annual revenues of about $900 million. Premium Standard Farms has pork packing plants in Missouri and North Carolina.

The Division's review focused on the following potential effects: The Division examined the extent to which the merger would likely affect competition in the sale