030309 US Sues Smithfield for Antitrust Issues

Washington - The U.S. Justice Department on Friday sued Smithfield Foods Inc. (SFD.N), alleging the company failed to properly notify antitrust enforcers about stock purchases it made during its attempts to buy rival IBP Inc. in 2000.

The department's antitrust division contends in its lawsuit that Smithfield violated merger notification rules on two occasions. It said it is seeking penalties of more than $5.4 million.

Smithfield, the world's largest pork producer, had no immediate comment on the lawsuit.

After a brief bidding war, IBP in January 2001 passed up Smithfield's bid in favor of a competing, $2.9 billion offer from Tyson Foods Inc.

U.S. antitrust laws require in some cases that a company pre-notify antitrust authorities if they are planning to buy stock as part of a possible merger.

That transaction could be exempt if the stock deal is "solely for the purpose of investment." But the department said that was not the case in the Smithfield stock acquisitions.

"Companies cannot evade (the requirement) by ignoring the plain language of the exemption," Deputy Assistant Attorney General Deborah Majoras said in a statement.

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