Senator Feinstein, 5 Others Ask Justice Department
to Review Purchase of Ethanol Producer by ADM
May 21, 2002

Washington, DC - U.S. Senators Dianne Feinstein (D-Calif.), Patrick Leahy (D-VT), Charles Schumer (D-NY), Hillary Clinton (D-NY), John Corzine (D-NJ) and Barbara Boxer (D-Calif.) today urged the Justice Department to review all proposed mergers and acquisitions of companies that produce ethanol, including the proposed purchase of Minnesota Corn Processors (MCP) by Archers Daniels Midland (ADM).

The Senators are concerned that mergers in the ethanol industry will have "severe repercussions" on the price and supply of gasoline.

In a letter to Attorney General John Aschroft, the Senators wrote: "We are very concerned about the recent announcement that Archers Daniels Midland (ADM) may purchase its largest competitor -- Minnesota Corn Processors (MCP). We are writing to ask that you review this potential sale and any future consolidation in the domestic ethanol industry very closely because evidence suggests the marketplace is already highly concentrated. A proposed merger between ADM and MCP could have severe repercussions on the price and supply of ethanol."

According to a recent report by the General Accounting Office, the top eight ethanol firms control 71 percent of the domestic ethanol market, with ADM controlling 41 percent of the ethanol market and MCP controlling 6 percent.

"Since the top eight ethanol firms control 71 percent of the market, a consolidation between ADM and MCP will move ADM closer to a monopoly in an already dangerous anti-competitive environment."

The move by ADM comes on the heels of a sweeping ethanol mandate passed by the Senate last month. Under the Senate energy bill, states would be forced to triple the amount of ethanol used in gasoline to 5 billion gallons by 2012, and domestic ethanol producers would continue to be protected from foreign competition by a 54-cent per gallon trade barrier.

"For these reasons," the Senators wrote, "we believe it is vital that the Justice Department closely review all proposed mergers and acquisitions in the ethanol industry."

###