DOJ Challenges Dairy Processors’ 2009 Merger
The Department of Justice (DOJ) has filed a civil antitrust lawsuit against Dean Foods Co., claiming that the company’s 2009 acquisition of Foremost Farms USA’s Consumer Products Division “eliminates substantial competition between the two companies in the sale of milk to schools, grocery stores, convenience stores and other retailers in Illinois, Michigan and Wisconsin.” The attorneys general of these states joined the complaint. According to a Wall Street Journal report, this is the first such action DOJ has filed under the Obama administration.
The complaint apparently seeks to undo the deal and require Dean Foods to notify the department at least 30 days before any future purchase of a milk processing operation. According to DOJ, the companies were the first and fourth largest in the region and their merger gave Dean Foods some 57 percent of the market for processed milk there. Local school districts evidently have fewer choices now when bidding on milk suppliers, and some “have been left with a monopoly provider.”
Dean Foods has reportedly pledged to vigorously defend the action, claiming that its acquisition “is fully compliant with antitrust laws” and benefits Wisconsin dairy farmers by giving them a stable and growing outlet for their milk. Contending that “competition is alive and flourishing in Wisconsin,” the company also reportedly said that its acquisition has produced cost savings for customers and will increase competition when the processing plants it acquired are fully integrated into Dean’s network. See DOJ Press Release, January 22, 2010; FoodNavigator-USA.com, January 25, 2010; U.S. Agricultural & Food Law and Policy Blog, January 26, 2010.
