Meat Industry INSIGHTS Newsletter

970931 IBP Says USDA Dismisses Feedlot Complaint

September 26, 1997

CHICAGO - Leading meatpacker IBP Inc said that USDA's top administrative law judge has dismissed a USDA complaint against IBP over the company's marketing agreement with some Kansas feedlots.

USDA alleged in a 1995 complaint that Dakota City, Neb.-based IBP was giving certain Kansas feedlots, known as the Beef Marketing Group (BMG), an "undue or unreasonable preference" through the agreement.

Victor Palmer, chief administrative law judge for the USDA, said there was no evidence that IBP's arrangements with the BMG violated any provisions of the Packers and Stockyards Act, the company said in a statement.

"There is no evidence of any injury to competition in the fed cattle industry in Kansas resulting from the agreement," IBP quoted Palmer's decision as saying.

"To the extent that (IBP's) participation in the agreement with BMG was an attempt to successfully compete with other packers in Kansas, it cannot be considered violative of the Act," the decision said.

"So long as the methods of the transaction used are not anti-competitive in nature, there is no reason for the government to stifle such innovation by interfering with (IBP's) business judgment and freedom to contract," it said.

A copy of the decision was not immediately available from the USDA and USDA officials were unavailable for comment.

IBP said its agreement with BMG, in place since 1994, helps provide a consistent flow of cattle to its Emporia, Kan., beef plant

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