The opinion of the court was delivered by: JOHN BATES, District Judge.
The United States of America (the "government") brings this
case against Archer-Daniels-Midland Company ("ADM") and Minnesota
Corn Processors, LLC ("MCP") for antitrust violations arising out
of the merger of those two companies. The government alleges that
the transaction would substantially lessen competition in the
highly concentrated markets for corn syrup and high fructose corn
syrup ("HFCS"). Presently before the Court is the government's
motion for entry of a proposed Final Judgment agreed upon by the
parties. For the reasons stated below, the Court will grant the
A. Defendants and the Proposed Transaction
ADM is a Delaware corporation with its principal offices in
Decatur, Illinois. Competitive Impact Statement ("CIS") at 3. ADM
is engaged in the processing and sale of agricultural products,
including corn syrup and HFCS, which are produced at domestic
plants in Iowa and Illinois. Id. In 2001, ADM had corn syrup
sales of approximately $66 million and HFCS sales of
approximately $480 million. Id.
MCP is a Colorado limited liability corporation with its
principal offices in Minnesota. Id. MCP is involved in the
agricultural processing and marketing business, and has corn
syrup and HFCS processing facilities in Minnesota and Nebraska.
Id. MCP's 2001 sales of corn syrup were approximately $56
million, and its HFCS sales totaled approximately $153 million.
MCP sells its corn sweetener products through a joint venture
with Corn Products International ("CPI"). Id. The joint venture,
known as CornProductsMCP Sweeteners LLC ("CPMCP"), is the
exclusive outlet for MCP's and CPI's corn syrup and HFCS
On July 11, 2002, ADM and MCP entered into an agreement under
which ADM would acquire MCP. Id. at 3-4.
Corn syrup and HFCS are both manufactured by wet mill
processing of corn. Id. at 4. Wet mill processing involves
soaking and grinding kernels to produce a starch slurry, followed
by the addition of enzymes to convert the starch slurry to sugars
such as dextrose and fructose. Id.
Corn syrup is used as a sweetener in the preparation of various
food products, including confectionary, bakery, and dairy
products, salad dressings, condiments, jams and jellies, lunch
meats, canned foods, and vegetables. Id. Specific applications
require different grades of corn syrup with different sweetening
effect, and corn wet millers that manufacture corn syrup make
most or all of the various grades of corn syrup. Id.
There are two grades of HFCS HFCS 42 and HFCS 55
with the numbers referring to the percentage of fructose
in the product. Id. HFCS 42 is used as a sweetener in jams,
jellies, baked goods, canned goods, dairy products, and some
beverages. Id. HFCS 55 is used mainly to sweeten soft drinks.
Corn syrup, HFCS 42, and HFCS 55 are each distinct products
without practical substitutes, differing from all other
sweeteners and each other in their physical characteristics,
means of production, uses, and pricing. Id. Although they are
functionally interchangeable with sugar in
many applications, they are much less expensive and therefore are
sweeteners of choice for many uses. Id. at 4-5; Compl. ¶ 13.
Very few purchasers of corn syrup, HFCS 42, and HFCS 55 would
switch to other sweeteners in response to a small but significant
increase in price. Compl. ¶ 14.
C. Alleged Harm to Competition as a Result of the Acquisition
The corn syrup and HFCS markets in the United States and Canada
are highly concentrated. In fact, there are just five firms
involved in the manufacture and sale of corn syrup, HFCS 42, and
HFCS 55 in the United States and Canada (which the government
maintains is the relevant market). CIS at 5. ADM accounts for 10%
of all corn syrup manufacturing capacity, 33% of all HFCS 42
manufacturing capacity, and 25% of all HFCS 55 manufacturing
capacity. Id. MCP, though CPMCP, accounts for more than 20% of
all corn syrup manufacturing capacity, more than 15% of all HFCS
42 manufacturing capacity, and more than 15% of all HFCS 55
manufacturing capacity. Id.
The government charges that the markets in the United States
and Canada will become substantially more concentrated if ADM
acquires MCP and succeeds to MCP's position in its joint venture
with CPI. Id. at 5. Competition between defendants in the corn
syrup and HFCS markets will be eliminated, competition generally
in the industry will lessen substantially, prices for corn syrup
and HFCS will increase, and the amounts produced will fall. Id.
at 5-6. In addition, the government highlights that a reduction
in the number of independent contractors from five to four will
increase the likelihood of anticompetitive coordination among the
few remaining corn wet millers. Id. at 5. Moreover, entry by a
new competitor would ...