Conagra, Inc

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IN THE MATTER OF CONAGRA, INC.

CONSENT ORDER, ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT Docket 3103. Complaint, Feb. 1983-Decision, Feb. , 1983 This consent order requires an Omaha, Neb. manufacturer and seller of bakery and hard wheat flour, among other things, to timely divest seven specified flour production facilities to a Commission-approved buyer(s), capable of maintaining the facilities as competitive entities. Additionally, the order prohibits the company from acquiring, for a period of ten years, any interest in any flour miling plant in eleven western states without prior Commission approval. Appearances For the Commission: John Peterson. For the respondent: Bertram M. Kantor Wachtell, Lipton, Rosen & Katz New York City.

COMPLAINT The Federal Trade Commission, having reason to believe that the above-named Respondent, subject to the jurisdiction of the Commission, has acquired stock and assets of Peavey Company in violation of Section 7 of the Clayton Act, as amended, 15 U. C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U. C. 45; and that a proceeding in respect thereof would be in the public interest hereby issues its complaint, pursuant to Section 11 ofthe Clayton Act 15 U. C. 21, and Section 5(b) of the Federal Trade Commission Act 15 U. C. 45(b), stating its charges as follows: Definitions For purposes ofthis complaint the following definitions shall apply: Bakery Flour means hard wheat flour, soft wheat flour and whole wheat flour sold generally to bakeries and institutional users. Hard Wheat Bakery Flour means flour miled from hard wheat which is sold generally to bakeries and institutional users to make white pan bread.

CONAGRA, INC.

Complaint Conagra Incorporated 1. Respondent Conagra, Inc. (Conagra) is a corporation organized under the laws of the State of Delaware, with its principal place of business at 200 Kiewit Plaza, Omaha, Nebraska. 2. Conagra manufactures and sells bakery flour and hard wheat bakery flour from 15 mils located throughout the United States. 3. In its fiscal year ended May 31, 1981, Conagra had total sales of approximately $1 376 808 000. Its sales of bakery flour for 1981 totaled $280 375 338.

Peavey Company 4. Prior to the merger, Peavey Company was a corporation organized under the laws of the State of Minnesota, with its principal place of business at Peavey Building, 730 Second Avenue South, Minneapolis, Minnesota.

5. Prior to the merger, Peavey manufactured and sold bakery flour from eight mills located throughout the United States. 6. In its fiscal year ended July 31, 1981, Peavey had total sales of approximately $820 884 000. Its 1981 sales of bakery flour were $301 735 606.

Jurisdiction 7. At all times relevant herein Conagra and Peavey were engaged in the manufacture and sale of bakery flour in interstate commerce and were engaged in commerce as I'commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U. C. 12, and each was a corporation whose business was in or affecting commerce as !learn. merce" is defined in Section 4 of the Federal Trade Commission Act as amended, 15 U. C. 44.

The Merger Agreement 8. On or about April 18, 1982, Conagra and Peavey entered into an agreement in principle which provides inter alia for the acquisition by Conagra of the stock and assets of Peavey. The transaction was consummated on or about July 20, 1982.

Trade and Commerce 9. A relevant line of commerce is the manufacture and sale of bakery flour.

Complaint 101 F.

10. A relevant line of commerce is the manufacture and sale of hard wheat bakery flour.

11. A relevant section of the country or geographic market is the Western States market, divided by the Eastern border of the States of Montana, Wyoming, Colorado and New Mexico and consisting of the States of Montana, Wyoming, Colorado, New Mexico, Idaho, Utah Arizona, Nevada, California, Oregon and Washington. 12. The manufacture and sale of bakery flour in the Western States market is highly concentrated, with the combined market share ofthe four largest manufacturers estimated to be approximately 65%. Peavey is the largest firm with approximately 24.3% of the market. Conagra ranks fourth with approximately an 8.5% share ofthe market. Subsequent to the acquisition, the Herfindahl-Hirschman Index wil be approximately 1794.4, having increased as a result of the merger by 413.

13. The manufacture and sale of hard wheat bakery flour in the Western States market is highly concentrated, with the combined market share of the four largest manufacturers estimated to be approximately 64.3%. Peavey is the largest firm with approximately 23.1 % of the market. Conagra ranks third with approximately an 11.1 % share ofthe market. Subsequent to the acquisition, the Herfindahl-Hirschman Index wil be approximately 1845. , having increased as a result of the merger by 512. 14. There are barriers to entry into the manufacture and sale of bakery flour and hard wheat bakery flour. Actual Competition 15. Prior to the merger, Conagra and Peavey were for many years actual competitors of each other in the manufacture and sale ofbakery flour and hard wheat bakery flour and actual competitors of others engaged in the manufacture and sale of bakery flour and hard wheat bakery flour throughout the Western States market. Effects; Violations Charged 16. The effects of the acquisition may be to substantially lessen competition or tend to create a monopoly in the relevant market in violation of Section 7 of the Clayton Act, as amended, 15 U. C. 18 and Section 5 of the Federal Trade Commission Act, as amended, 15 C. 45, in the following ways, among others: CONAGRA, INC.

Decision and Order (a) actual competition between Conagra and Peavey in the manufacture and sale of bakery flour and hard wheat bakery flour has been eliminated;

(b) actual competition between competitors generally in the manufacture and sale of bakery flour and hard wheat bakery flour may be lessened;

(c) Peavey has been eliminated as an actual substantial independent competitor in the manufacture and sale of bakery flour and hard wheat bakery flour.

Commissioner Bailey voted in the negative. Commissioner Douglas did not participate.

DECISION AND ORDER The Federal Trade Commission ("Commission ) having initiated an investigation of the acquisition of the stock and assets of Peavey Company ("Peavey ) by Conagra, Inc. ("Conagra ), and Conagra having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission would charge Conagra with violations of the Federal Trade Commission Act and the Clayton Act; and Conagra, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by Conagra of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by Conagra that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it has reason to believe that Conagra has violated the said Acts, and that the complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period Of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Conagra is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its principal offces at One Central Plaza, Omaha, Nebraska. 2. The Federal Trade Commission has jurisdiction of the subject (g)(j) Decision and Order 101 F. matter ofthis proceeding and ofConAgra and the proceeding is in the public interest.

ORDER For purposes of this Order (a) Conagra means Conagra, Inc., its subsidiaries, affliates, divisions, successors and assigns, together with any oftheir offcers, directors and employees;

(b) Peavey means Peavey Company, its subsidiaries, affliates, divisions, successors and assigns, together with any of their offcers, directors and employees;

(c) Salt Lake City Plant means the assets acquired by Conagra from Peavey that are located in Salt Lake City, Utah, and that are used in the production of wheat flour;

Cd) Ogden Plant means the assets acquired by Conagra from Peavey that are located in Ogden, Utah, and that are used in the production of wheat flour;

(e) Billings Plant means the assets acquired by Conagra from Peavey that are located in Bilings, Montana, and that are used in the production of wheat flour;

(f Great Falls Plant means the assets of Conagra that are located in Great Falls, Montana, and that are used in the production of wheat flour;

San Francisco Terminal means the bulk flour terminal, acquired by Conagra from Peavey that is located at 790 Pennsylvania Street San Francisco, California;

(h) Standard Flour means the flour distribution plant known as Standard Flour, acquired by Conagra from Peavey, that is located at 6414 Gayhart Street, City of Commerce, California; (i) Coast-Dakota means the baking mix plant and flour distribution plant, acquired by Conagra from Peavey, that are located at 2430 Union Street, Oakland, California, and 400 Oak Street, Oakland, California;

Facilities means the Salt Lake City Plant, the Ogden Plant, the Bilings Plant, the Great Falls Plant, the San Francisco Terminal Standard Flour and Coast-Dakota; and (k) Western Region means the States of Oregon, Washington, California, Arizona, New Mexico, Nevada, Utah, Wyoming, Colorado Idaho and Montana.

CONAGRA, INC.

Decision and Order It is ordered That within fifteen (15) months of the date on which this Order becomes final and subject to the prior approval of the Federal Trade Commission, Conagra shall divest the Facilities absolutely and in good faith to one or more third parties that represent that they intend to use the Facilities in the production of wheat flour. Pending divestiture, Conagra shall neither make nor permit any deterioration of the Facilties, except for normal wear and tear, that might impair their operating abilities, competitive viabilty or market value.

It is further ordered That, for a period of ten (10) years from the date on which this Order becomes final, Conagra shall not acquire, without the prior approval of the Federal Trade Commission, directly or indirectly, any stock, assets, or interest in any flour millng plant located in the Western Region; provided, however that nothing in this Paragraph II shall prohibit Conagra from acquiring in the ordinary course of business used equipment for the miling of wheat flour. It is further ordered That within sixty (60) days after the date this Order becomes final, and every sixty (60) days thereafter until ConAgra has fully complied with the provisions of Paragraph I of this Order, Conagra shall submit to the Federal Trade Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying with, or has complied with that provision. All compliance reports shall include, among other things that are required from time to time, a full description of contacts or negotiations with any party for the sale of plants pursuant to Paragraph I of this order, and the identity of all such parties. Conagra shall furnish to the Federal Trade Commission copies of all written communications to and from such parties, and all internal memoranda, reports, and recommendations concerning divestiture. On the first anniversary of the date this Order becomes final and on every anniversary date thereafter for the following nine (9) years Conagra shall submit to the Federal Trade Commission a verified written report setting forth the manner and form in which it has complied or is complying with Paragraph II of this Order. Decision and Order 101 F. It is further ordered That Conagra notify the Federal Trade Commission at least thirty (30) days prior to any proposed change in Conagra, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, or any other proposed change in the corporation, which may affect compliance obligations arising out of this Order.

Commissioner Bailey voted in the negative; Commissioner Douglas did not participate.

), INDIANA FEDERATION OF DENTISTS Complaint