Source:  Tom Johnston, MEATINGPLACE.COM, 5/11/11

A federal lawsuit claiming George’s Inc.’s purchase of Tyson Foods Inc.’s Harrisonburg, Va., poultry complex will harm competition in the region fails to recognize the economic benefits of the transaction, the companies said today in a joint statement.

The U.S. Department of Justice filed an antitrust lawsuit in U.S. District Court in Harrisonburg that argues the deal would reduce to two (George’s and JBS/Pilgrim’s Pride) from three the number of companies with which Shenandoah Valley chicken growers can do business. The feds want the court to deem the acquisition unlawful and offer relief, such as divestiture of the plant.

“America’s farmers deserve competitive prices and terms for the sale of their services, and the Antitrust Division will vigorously pursue anticompetitive acquisitions that stand in the way of achieving that goal,” Assistant Attorney General Christine Varney said in the DOJ’s statement.

George’s and Tyson, which closed the $3 million deal this week, said the DOJ is off base.

"This lawsuit is a blatant example of government overreach that could end up hurting the people it purports to protect,” George’s CEO Gary George said, adding that his company is honoring and extending Tyson’s grower contracts and retaining nearly all of its employees.

Benefits
George said the company plans to gradually increase production at Harrisonburg, benefiting growers by reducing time between flocks and giving plant workers more hours per week.

Donnie King, senior group vice president of Poultry and Prepared Foods for Tyson Foods Inc., said the deal “saved an unprofitable poultry operation that was in danger of closing.  Such a shutdown would have affected the lives of more than 500 employees and 121 contract growers, as well as local businesses that support and benefit from the poultry complex.  By trying to force George's to sell this complex and in effect undo this sale, the Department of Justice is jeopardizing the livelihood of hundreds of people in the Harrisonburg community."

The DOJ said it launched a probe after the companies announced the deal on March 18.
The Harrisonburg complex includes the processing plant in Harrisonburg and a hatchery in Broadway, Va., as well as a feed mill and truck shop in New Market, Va. Tyson acquired the Harrisonburg complex in 1989, when it purchased Holly Farms. The complex currently produces commodity boneless and whole-bird chicken, as well as chicken leg quarters for sale to retail, foodservice and international customers.
 

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