Regulators Scrutinize Proposed Business Merger Of Flour Miller
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Tuesday, November 19, 2013.
Competition is an important aspect of managing an efficient and productive free market economy. This is what keeps prices fair, which ultimately benefits all of society. In order to maintain a well-functioning free market, the government is sometimes required to regulate mergers in order to keep one single firm from obtaining a monopoly over an industry in California and across the nation. One flour mill company is now being scrutinized by regulators over its recent proposed business merger.
The nation's largest flour milling company, Horizon Milling, is proposing a merger with the milling arm of the large food company ConAgra. Horizon Milling is jointly owned by Cargill and CHS. Cargill is a privately-held company while CHS is an agricultural cooperative. Many in the industry are worried about the proposed merger because they believe it would give Horizon Milling too large of a market share, something that would result in anti-competitive and even monopolistic trends within the industry.
The newly merged company would be known as Ardent Mills and would control more than 34 percent of the flour market in the United States. Critics argue this is too large of the market for one company to control because Ardent Mills would be able to put its competitors out of business with the sheer volume the newly merged company would be able to produce. However, the would-be CEO of Ardent Mills argues that there would still be many competitive forces in the industry.
This case illustrates what role regulators are able to play in any proposed business merger in California or in any other state. Regulators are not only looking at anti-competitive results of a potential merger, they are also making sure the proposed merger conforms with any applicable rules and regulations. Additionally, the correct legal paperwork must be submitted to the appropriate regulatory agencies in order to ensure the business merger is finalized properly.
Source: KCUR.org, Proposed Merger Could Create Wheat Milling Goliath, Luke Runyon, Nov. 18, 2013