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Federal Register / Vol. 86, No. 108 / Tuesday, June 8, 2021 / Notices
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and regions, farmers of these crops would not switch to production of other agricultural commodities in sufficient numbers to render unprofitable a small but significant decrease in price by a hypothetical monopsonist of that crop.
The purchase of corn and the purchase of soybeans for end use or for sale to the export market each constitute a relevant product market and line of commerce under Section 7 of the Clayton Act, 15
U.S.C. 18.
2. Relevant Geographic Markets Farmers typically haul grain by truck to nearby elevators or end users.
Transportation costs increase significantly with every mile the farmers must transport the grain to reach a purchaser, reducing the farmers profits.
Transporting grain also consumes farmers time. For these reasons, a small change in price would not likely cause farmers to significantly expand the distance they are willing to drive to sell their grain. The distance a farmer is willing to drive is determined in large part by the second-closest potential purchaser, which is the best competitive threat to the purchaser closest to the farmer.
Rail or river elevators and other grain purchasing facilities, such as grain crush plants and ethanol plants, typically purchase grain from within the facilitys draw area. Draw area is an industry term that describes the locations of farms from which the facility expects to acquire most of its grain. Each elevator or end user has a unique draw area due to characteristics such as surrounding road conditions, crop output, local topography, and proximity of competing purchasers. The draw area of a grain purchasing facility is determined by transportation time and costs and so is usually very localized.
The draw area of one grain facility frequently will overlap with that of another, resulting in competition between the facilities to purchase grain from farmers. Some farming areas of the country may be located such that they fall within the overlapping draw areas of only a few competing grain purchasing facilities. In particular, in the following areas where the Defendants river elevators have overlapping draw areas, there are only a small number of grain purchasers competing to purchase farmers corn and soybeans:
a The overlapping draw areas of elevators in the vicinity of McGregor, Iowa;
b The overlapping draw areas of elevators in the vicinity of Albany/
Fulton, Illinois;

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c The overlapping draw areas of elevators in the vicinity of Shawneetown, Illinois;
d The overlapping draw areas of elevators in the vicinity of Caruthersville, Missouri;
e The overlapping draw areas of elevators in the vicinity of Huffman, Arkansas;
f The overlapping draw areas of elevators in the vicinity of Osceola, Arkansas;
g The overlapping draws areas of elevators in the vicinity of Helena, Arkansas;
h The overlapping draw areas of elevators in the vicinity of Lake Providence, Louisiana; and i The overlapping draw areas of elevators in the vicinity of Lettsworth, Louisiana.
These geographic areas satisfy the hypothetical monopsonist test a monopsonist is a buyer that controls the purchases in a given market, the buyer-side counterpart to the hypothetical monopolist test. A
hypothetical monopsonist of the purchase of corn or soybeans in each of these areas would impose at least a small but significant and non-transitory decrease in the price paid to farmers.
Such a price decrease for these products would not be defeated by farmers selling to purchasers outside their local area due to the added costs of transportation.
As farmers in these areas have already determined the best use of their farmland, a price decrease would also not be defeated by farmers switching to growing alternative crops. Farmers currently growing corn or soybeans are unlikely convert to production of other agricultural commodities in sufficient numbers to prevent a small but significant decrease in price. Nor could area farmers thwart a post-transaction price decrease by selling instead to local country elevators. Country elevators simply resell grain to river and rail elevators or to other end users; if Defendants lower prices posttransaction, country elevators would be forced to lower their own price to farmers to maintain profitability.
Consequently, country elevators cannot mitigate a price decrease resulting from the Transaction. Therefore, each of the overlapping draw areas above constitute a relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18, for the purposes of analyzing this transaction.
3. Competitive Effects In the each of the nine relevant geographic markets, ZGC and its affiliate CGB and Bunge are two of a very small number of grain purchasers
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competing to buy corn and soybeans; in two of these markets, CGB and Bunge are the only elevators available to area farmers. Famers located within these geographic areas depend on this competition to obtain a competitive price for their grain. ZGCs acquisition of Bunges elevators will substantially lessen competition for the purchase of corn and soybeans in these markets, enabling it to unilaterally depress prices paid to farmers for their crops.
Because there are few alternative grain purchasers within these geographic areas, purchases of grain are highly concentrated, with the Defendants accounting for a majority of corn and/or soybean purchases in a given year. For example, in 2019, the Defendants purchased upwards of 95%
of the total corn and soybean output of farmers in Pemiscot County, Missouri;
Pemiscot County falls within the draw area of Bunges Caruthersville, Missouri river elevator, and the draw areas of CGBs Caruthersville and Cottonwood, Missouri river elevators.
By eliminating head-to-head competition between ZGC and its affiliate CGB and Bunge for grain purchases in these geographic markets, the Transaction would result in lower prices paid to farmers, lower quality of services offered to farmers at the grain origination elevators, and reduced choice of outlets for farmers to sell their grain. The Transaction would substantially lessen competition and harm the many farmers selling their crops to river elevators along the Mississippi River and its tributaries.
4. Entry New entry and expansion by competitors likely will not be timely and sufficient in scope to prevent the likely anticompetitive effects of Defendant ZGCs acquisition of Bunges elevators. Competitors are unlikely to construct new elevators in these geographic markets because of the high cost of construction and the difficulty of finding appropriate locations to build along the Mississippi or its tributaries.
Even assuming such a location could be found and regulatory and permitting requirements could be fulfilled, constructing a river elevator would take approximately two years to complete.
III. Explanation of the Proposed Final Judgment The divestiture required by the proposed Final Judgment will remedy the loss of competition alleged in the Complaint by establishing an independent and economically viable competitor for the purchase of corn and soybeans in certain geographic markets
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