For Immediate Release
ConAgra, Ralcorp Merger Reduces Grocery Competition, Warrants Close and Skeptical Scrutiny
WASHINGTON - Today, the consumer group Food & Water Watch demanded that the U.S. Federal Trade Commission and the U.S. Department of Justice extend the antitrust review of the proposed merger between ConAgra Foods, Inc. and Ralcorp Holdings Inc. In a letter sent to FTC Bureau of Competition Director Richard Feinstein and DOJ Acting Assistant Attorney General Renata Hesse, Food & Water Watch outlines several antitrust concerns with the proposed corporate union that deserve close scrutiny; requests the agencies to oppose the early termination of the antitrust review; and urges federal regulators to make a second request for information, extending the merger waiting period to allow more time to review the proposed merger.
“Corporations claim that these types of mega-mergers allow for efficiencies of scale that create cost savings for consumers — but the reality is, consumers rarely see a decrease in what they pay for food,” said Food & Water Watch Executive Director Wenonah Hauter. “As our food system continues to consolidate, consumers actually pay more for their food, farmers receive less, and the bankers and executives who negotiate these mergers and run the resulting monolithic corporations make out like bandits.”
Both ConAgra and Ralcorp have aggressively pursued a string of mergers in recent years, but the proposed merger would be a significantly larger amalgamation of retail grocery manufacturing market power, in terms of size, scope and breadth of products, than the prior acquisitions of either party, the letter explains.
ConAgra and Ralcorp both produce a wide range of snack foods, peanut butter and frozen entrees, so the proposed merger could reduce competition and potentially raise consumer prices. The combined manufacturers also would represent an increase in buyer power for farm goods, especially for cereals, oilseeds, meats and dairy products.
The proposed merger represents exactly the anticompetitive behavior that the Justice Department identified as an oversight priority this year. In a May 2012 report analyzing the five 2010 agricultural concentration workshops conducted with the U.S. Department of Agriculture, the Justice Department “stressed the importance of vigorous antitrust enforcement and detailed the ways that anticompetitive mergers and conduct can harm producers, consumers, and others.”
“If permitted to move forward, this merger will perpetuate the fallacy that consumers have choice when they go to the grocery store,” said Hauter. “When consumers learn that the variety of brand names and colorful packages conceal that a small handful of corporations control most of what they eat, they will be outraged.”
Ralcorp is a leading manufacturer of private label (or store brand) products, and ConAgra is rapidly moving into private label foods. The merger would significantly affect the dynamic between private label groceries and name brand groceries, as Ralcorp and ConAgra share competitors across the grocery store in private label and name brand products. Lower-priced private label products offer higher profits for the retailers that sell them, and this merger could undermine competition by giving retailers more leverage over other brand name food manufacturers.
“The FTC and DOJ should take this opportunity to restore some fairness in our food system by exercising their statutory authority to perform a thorough antitrust review of this merger,” concluded Hauter.
A copy of the letter can be found here: http://documents.foodandwaterwatch.org/doc/ralcorp_conagra_ftc_doj_lette...
Food & Water Watch works to ensure the food, water and fish we consume is safe, accessible and sustainable. So we can all enjoy and trust in what we eat and drink, we help people take charge of where their food comes from, keep clean, affordable, public tap water flowing freely to our homes, protect the environmental quality of oceans, force government to do its job protecting citizens, and educate about the importance of keeping shared resources under public control.
Food & Water Watch is a nonprofit consumer organization that works to ensure clean water and safe food. We challenge the corporate control and abuse of our food and water resources by empowering people to take action and by transforming the public consciousness about what we eat and drink.