Despite the announcement that an agreement between the parties has been concluded to allow the acquisition of Sanderson Farms, the Department of Justice intevened in the transaction. The consortium comprising Cargill Inc. and Continental Grain will become the owners of Sanderson Farms in a $4.5 billion purchase of shares entered into in August 2021. The price of DOJ approval is a consent agreement modifying the tournament system and wage restitution to plant workers amounting to $85 million
According to industry sources, the conditions imposed by the DOJ will be almost complete elimination of the tournament system regulating payment to contractors. The Administration is attempting to scrap this proven and equitable method to determine remuneration through a rule to be issued under the Packers and Stockyards Act. Generally, the DOJ Antitrust Division requires divestment of facilities to encourage competition and to reduce the possibility of an unfavorable effect on competitors or consumers.
It would appear that the DOJ does not regard the proposed merger as a competition issue but is using its leverage to achieve an objective that is outside their remit. Although a delay in completion of the transaction would have represented uncertainty and anxiety for stakeholders, Sanderson Farms along with competitors has benefited from high prices as reflected in the report for the most recent quarter ended April 30th The posting on what will probably be the last quarter of SAFM before de-listing can be retrieved by entering "Sanderson" in the Search block.