Source:  Lisa M. Keefe, MEATINGPLACE.COM, 1/22/10

The U.S. Department of Justice on Friday announced that, to settle a federal lawsuit alleging antitrust violations, Smithfield Foods Inc. and its Premium Standard Farms Inc. unit will pay $900,000 in civil penalties.

The lawsuit, which also was filed on Friday in U.S. District Court for the District of Columbia, charged the two companies with violating premerger waiting period requirements that are part of the Hart-Scott-Rodino Act of 1976, according to DOJ news release.

Specifically, the DOJ said, after Smithfield and Premium Standard announced their intent to merge in September 2006, Smithfield exercised operational control over a significant segment of Premium Standard's business, at a time when both companies were to have observed the premerger waiting period on such collaboration.

For example, executives at Premium Standard allegedly sought Smithfield's consent for all of the hog procurement contracts that arose during the waiting period. Requiring a buyer's approval of the seller's ordinary course contracts can prematurely transfer operational control, which is a violation of premerger notification requirements, the DOJ said.

The DOJ noted that its complaint does not challenge the underlying merger, which the companies announced they had closed on May 7, 2007.