- The Washington Times - Friday, February 28, 2003

WASHINGTON, Feb. 28 (UPI) — The Justice Department Friday filed a lawsuit against Smithfield Foods Inc., seeking $5.4 million for alleged violations of antitrust law.

Smithfield twice failed to file pre-merger notification documents with the Justice Department before purchasing stock of competing meat and pork processor IBP Inc. in 1998, and in 1999 to 2001.

Based in Smithfield, Va., the company lost out to Tyson Foods Inc. in acquiring IBP.

Smithfield is the nation's largest hog producer and pork packer and IBP was the second-largest packer, according to the Justice Department.

The company should have filed pre-merger documents under the Hart-Scott-Rodino Act because its stock purchases weren't solely for investment, but were steps toward a merger, the department said.

"Companies cannot evade Hart-Scott-Rodino Act filing obligations by ignoring the plain language of the exemption," said Deborah P. Majoras, principal deputy assistant attorney general for the department's antitrust division.

Majoras added that acquisition of stock in a firm that is also a "potential takeover target or merger candidate is not an acquisition that is solely for investment."

In a statement, Smithfield said the Justice Department's suit "has no merit." The company "intends to defend itself vigorously."

The lawsuit had little effect on Smithfield stock. Shares fell 18 cents, or 0.96 percent, to close Friday $18.53 on heavy volume of 415,000 shares traded on the New York Stock Exchange.

Smithfield said that the suit followed the company's decision not to settle the dispute out of court. "The two parties have differing viewpoints on the interpretation of a provision of the Hart-Rodino Act and the matter should be decided in the courts," the company said.

The Hart-Scott-Rodino Act requires companies planning certain stock acquisitions to file notification documents ahead of time with the Justice department and the Federal Trade Commission. And the firm making the acquisition must observe a mandatory waiting period before proceeding with the transaction, allowing antitrust regulators to examine whether the planned purchase would violate antitrust laws.

Smithfield said that it believes that it complied with the pre-notification requirements at all times. It said that it believes that the Justice Department's position is not supported by case law.


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