DOJ, George's strike a deal on plant acquisition
June 23, 2011
by Meat&Poultry Staff
WASHINGTON – George’s Inc. must make important capital improvements to a Harrisonburg, Va., chicken processing plant in order to settle the litigation surrounding George’s acquisition of the Tyson Foods Inc. plant, the Department of Justice announced.
DOJ’s antitrust division filed a proposed settlement in US District Court for the Western District of Virginia in Harrisonburg. If approved by the court, the settlement would resolve the civil antitrust lawsuit filed by the department on May 10, and would resolve the lawsuit’s competitive concerns.
George’s acquired Tyson’s Harrisonburg chicken processing plant in May. DOJ learned of the transaction, which was not required to be reported under the premerger notification law, shortly before it was completed. DOJ filed a lawsuit alleging the acquisition would likely have the anti-competitive effect of reducing the prices paid to Shenandoah Valley area farmers who raise chickens for processors such as Tyson Foods and George’s.
The settlement requires George’s to make capital improvements to the Harrisonburg chicken processing plant that will lead to a significant increase in chickens that will be processed at the facility. The improvements include installing a special freezer and deboning equipment, which will allow George’s to produce a variety of highly valued products at its Harrisonburg and Edinburg facilities in the Shenandoah Valley.
As a result of these improvements, George’s will have the incentive and ability to increase local poultry production, thereby increasing the demand for grower services and averting the likely adverse competitive effects arising from the acquisition, DOJ reasons. The division will also monitor George’s efforts to improve the plant until the new equipment is installed and operational.
DOJ also noted in its court documents there were significant concerns associated with the viability of the Harrisonburg processing plant, which was operating at a loss over the past few years. Taking all of the facts and circumstances into consideration, the department determined the proposed settlement is an effective remedy.
Springdale, Ark.-based George’s is the 11th largest chicken processor in the US, with output of more than 20 million lbs. of chicken per week. In addition to its Shenandoah Valley operations, George’s processes chicken in Springdale and Cassville, Mo. Springdale, Ark.-based Tyson Foods is the largest chicken processor in the US, with output of more than 205 million lbs. of chicken per week.
This proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Anyone can submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy & Agriculture Section, 450 Fifth Street, N.W., Suite 8000, Washington, DC 20530. At the conclusion of the 60-day comment period, the court may enter the proposed settlement upon finding that it is in the public interest.