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Department of Justice digs into food corruption and antitrust concerns

February 9, 2010 | 10:11 am

When it comes to the food sector, the Department of Justice -- particularly its antitrust division -- has become very hungry.

Last month Monsanto Co., the world’s largest seed developer, disclosed that the DOJ has requested information about its herbicide-friendly soybean seeds business as part of a probe into anticompetitive practices.

The DOJ also filed an antitrust lawsuit in Milwaukee against Dean Foods Co., the country’s leading distributor of dairy products, in an effort to dissolve a 2009 deal it made to buy a Midwestern competitor. The deal allegedly left many Wisconsin school districts with only one dairy supplier and gave the company a dominant hold over the sale -- and, allegedly, curtailing the competition over price -- of milk in Illinois, Michigan and Wisconsin, according to the complaint. (The attorney generals for all three states also joined the suit.)

And, of course, there’s the ongoing probe into California’s tomato industry.

Amid concerns about corrupt practices in the food industry, nine people have pleaded guilty to charges including racketeering, money laundering and bid-rigging in a federal probe of SK Foods of Monterey. Last week, the FBI arrested the company’s former owner, Frederick Scott Salyer, at New York's John F. Kennedy International Airport as he was exiting from a return flight from London. (Salyer has been charged with 20 counts of mail and wire fraud. His attorney has said his client plans to plead not guilty.)

So, what’s going on? Turns out that the federal government is paying closer attention to the public complaints that, as the food sector becomes more industrialized and consolidated, grocery bills may be growing because of corrupt or monopolistic practices among food processors, distributors or farmers.

Now, given that, let's consider the lowly tomato.

About 95% of the country’s tomatoes are processed in one of four companies in California. A lot of what they make is paste -- essentially turning Roma (and other kinds) of tomatoes into the thick red, gooey stuff used to make ketchup, salsa, sauces, juice, soups and other foods.

Think there’s much money in paste? Oh, yeah. Over the last several years, more than 2 billion pounds of tomato paste has been squeezed out of central California -- a red, thick mountain worth at least $800 million, according to court documents.

And SK Foods? Before it was bought by a Singapore company last year out of Bankruptcy Court, it too was one of these giants.

To read more about the Justice Department’s probe into the California tomato industry, check out this story.

-- P.J. Huffstutter

Photo credit: Credit: Barbara Davidson / Los Angeles Times