-Caveat Lector- [01/14] Cargill antitrust issues complicated, Iowa State economist says WASHINGTON, Jan 14 (Reuters) - Cargill Inc.'s acquisition of the grain business of Continental Grain Co. would give it control over 36 percent of ship loading capacity in the Louisiana and Texas Gulf, up from 26 percent currently, according to a new study by a team of university economists. But the complicated dynamics of the U.S. grain export market make it difficult to evaluate the deal's impact on competition and prices in some areas, they said. Cargill, based in Minnetonka, Minn., is the largest privately held U.S. company and the world's largest private agribusiness company. It's the No. 1 U.S. grain exporter and one of the world's largest food processors. Cargill's other operations include petroleum and financial futures trading. Continental Grain, headquartered in New York City, is the second largest U.S. grain exporter. After selling that business, Continental Grain plans to change its name to ContiGroup Companies and will be involved in such diverse enterprises as financial services, meat processing, flour milling, and natural gas trading. A "white paper" analysis of the proposed Cargill/Continental deal was put together by economists at Iowa State University, Oklahoma State University and North Dakota State University. The paper outlined general U.S. grain market conditions and did not reach any conclusions on the benefits or drawbacks of the acquisition. The economists interviewed experts at the U.S. Agriculture Department, the Chicago Board of Trade, the Commodity Futures Trading Commission and Cargill for data. "We prepared this as a white paper so that others can have the facts and things they ought to think about to have an informed debate," said Marvin Hayenga, an ISU economist and lead author. Several farm groups and Democratic senators have criticized the acquisition, claiming the combination of the top two U.S. grain exporters could decrease competition. Sen. Richard Lugar, an Indiana Republican who heads the Senate Agriculture Committee, has scheduled a hearing later this month on concentration in the farm sector. Big change in Louisiana/Gulf The Cargill acquisition would result in relatively little additional market concentration in overall U.S. storage and acquisition of grain by farmers, or at most river barge terminals, he said. But specific terminals could see big increases, Hayenga said. Cargill, which aims to finalize the deal by the end of the first quarter, contends the acquisition will help it become more competitive and efficient in moving U.S. farmers' grain to market. One of the biggest increases in concentration under the deal would be in the combined Louisiana and Texas Gulf port area, where Cargill would grow to 36 percent of market share, the study said. "The advantages of low-cost barge transportation may make the Louisiana Gulf ports more attractive destinations than the Texas Gulf for export grain from many parts of the upper Midwest," the study said. But it added that the Gulf ports also are competitive with each other and "probably" with East Coast and Great Lakes ports for export business. The Texas Gulf ports also compete with the Pacific Northwest ports for some grain shipments from the western farm belt that is headed to Asia, the study said. "Thus, the shares by leading firms in a local or regional area may not be a good indicator of their potential impact on competition and prices in those areas," the study said. Cargill, ADM would control Illinois River Along the northern Illinois River -- a key delivery area for futures contracts -- the deal would give Cargill 27 percent of the terminal storage, the study found. That would be second only to Archer Daniels Midland Co. [ADM], which now controls 49 percent of facilities north of Pekin, Ill. "Cargill's acquisition might not appear problematic in this area if ADM was not so large," the study said. "However, the combination of these two large players and their share of volume traded, not just storage capacity, in the futures market delivery area may prompt closer examination by the Justice Department." The Chicago Board of Trade may need to expand its wheat and corn delivery areas to eliminate any appearance of the risk of manipulation of deliveries, handling costs or futures prices, the study said. "Excess capacity by smaller elevator competitors, other processors, feed companies, etc., and ease of entry might ease concerns about excess market power in this regional market," the report said. The study also said there were many competitors to buy grain from farmers in most areas. "The acquisition probably will make little difference in local competition for farmers' grain," it said. 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