Processing Magazine

Feds File Antitrust Suit Against Dean Foods Over Milk Sales

January 25, 2010
According to the Associated Press, the Justice Department has filed an antitrust lawsuit against the nation''s largest dairy company, alleging that Dean Foods Co. purchased a smaller dairy company in Wisconsin to quash competition and drive up milk prices. The lawsuit seeks to undo Dean Foods'' 2009 purchase of Foremost Farms USA''s Consumer Products Division and to require Dean to give 30 days notice before all future acquisitions of milk processing operations. The suit signals a shift of antitrust policy in Washington, where regulators have promised to take more aggressive action in an agricultural sector dominated by big firms that have consolidated market share over the last two decades. Dallas-based Dean Foods released a statement saying it was "disappointed" the department took action on a deal closed 10 months ago. Dean Foods’ April 2009 purchase of Foremost was small enough that the company did not have to seek prior approval from the department. The deal gave Dean two dairy processing plants in Wisconsin, and left many school districts with only one milk supplier, according to the lawsuit. Dean gained 57 percent market share in parts of Michigan, Illinois and Wisconsin through the deal. The lawsuit portrays the acquisition as a strategic move to eliminate a strong competitor. Dean''s purchase was completed April 1, according to the suit. On April 20, the Department of Justice installed Christine Varney as attorney general over the antitrust division. She has since identified agricultural firms as a focus of antitrust enforcement, and the department is holding a series of public workshops this spring and summer to examine competition issues in the meat, dairy and grain sectors. Dairy farmers in Vermont and elsewhere have complained for months that they have been hurt by low milk prices, even as big processors like Dean Foods keep milk prices high at the retail level and reap profits.