US senators fear ethanol monopoly from ADM,MCP merger

WASHINGTON, May 21 Reuters has reported that fearing a monopoly in the ethanol market, a group of U.S. senators urged the Justice Department on Tuesday to closely review Archer Daniels Midland's possible purchase of its chief competitor Minnesota Corn Processors.

The two companies combined would control almost half of U.S. production of ethanol, which is made from corn and blended into gasoline to make motor fuel burn more cleanly.

The move by giant ethanol producer ADM comes comes on the heels of energy legislation passed by the Senate last month that would require ethanol use in the United States to triple to 5 billion gallons a year in a decade.

"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," the lawmakers said in a letter to Attorney General John Ashcroft.

"A proposed merger between ADM and MCP could have severe repercussions on the price and supply of ethanol," the lawmakers added.

The letter was signed by Democrats Dianne Feinstein and Barbara Boxer of California, Charles Schumer and Hillary Clinton of New York, John Corzine of New Jersey and Patrick Leahy of Vermont.

The lawmakers led the recent failed fight in the Senate to scale back the ethanol mandate in the energy bill.

The senators were worried gasoline prices would rise because ethanol is so difficult and costly to transport.

In their letter to U.S. Attorney-General John Ashcroft, the lawmakers said a handful of firms already produce most of the nation's ethanol and a merger between ADM and MCP would come close to create a monopoly.

The top eight ethanol firms control 71 percent of the domestic ethanol market, with ADM accounting for 41 percent of ethanol production and MCP controlling 6 percent, according to the General Accounting Office.