000633 Justice Probes Meatpacker Alliance

St. Paul, MN - - The Justice Department is investigating whether a business-to- business Internet Web site being designed by six meatpacking companies violates federal antitrust law.

In April, 10 Minnesota lawmakers asked the department's antitrust division to look into the joint venture to create an online marketplace for meat and poultry products, service and information.

Assistant U.S. Attorney Joel Klein, head of the antitrust division, responded that the agency “is aware of this new venture and is taking steps to determine if its formation or operation is likely to have anticompetitive effects on producers and consumers.

“You can be assured that if we conclude that the venture violates the antitrust laws, we will take appropriate action,” Klein wrote in a letter received by state officials this week.

Rep. Doug Peterson, one of the state lawmakers who had asked for the investigation, said participants in the $20 million e-commerce venture might try to control supply by jointly marketing their products and staying away from each other's customers.

“I'm extremely pleased that federal authorities responded to our call to take a look at this plan, which we are concerned will create an 'OPEC of meat' damaging to both farmers, consumers and small business,” he said.

The alliance includes Cargill's red meat division, Excel Corp.; IBP; Smithfield Foods and Tyson Foods. The six packers have combined annual sales of about $40 billion.

Tyson spokesman Ed Nicholson said there would be “no collusion with regard to fixing prices. Comparing it to OPEC is completely unfounded.”

“We will cooperate with any review,” said Mark Klein, communication manager for Excel.

IPB spokesman Gary Mikelson said investigators are likely to be disappointed by what they will find.

“What they will learn is that it is designed as an independent company. ... If anything, we believe competition will be enhanced,” he said.

The venture - still in its formative stages - would provide a single, convenient place for buyers and sellers of meat and poultry products to connect with each other and allow faster product comparison and price negotiation, reducing paperwork and other duplication, participants say.

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