Dean Foods to fight Justice Department’s anti-trust lawsuit
The merger between Dean Foods and Foremost Farms USA's Consumer Products Division has removed competition between the two companies when selling milk to grocery stores, retailers and schools in Illinois, Wisconsin and Michigan, according to the Justice Department.
Christine Varney, assistant attorney general in charge of the department’s Antitrust Division, said: "The purpose of the department's lawsuit is to restore competition so that schools, grocery stores and other retailers in Illinois, Michigan and Wisconsin, will pay lower prices for their milk."
Monopoly provider
The acquisition has created a monopoly provider for many school districts in Wisconsin and the Upper Peninsula, claimed her department. This marks the first legal challenge to undo or block an acquisition mounted by the Obama administration's antitrust team at the Justice Department.
The lawsuit also requires the company to notify the department at least 30 days before any future acquisition involving a milk processing operation.
After the acquisition, Dean Foods controls about 57 percent of the market for processed milk in northeastern Illinois, the Upper Peninsular and Wisconsin.
But Dean Foods protests that “…competition is alive and flourishing in Wisconsin.”
A company statement pointed out that: “The company believes its acquisition of the DePere and Waukesha, Wis. fluid milk processing plants from Foremost is fully compliant with antitrust laws, and will defend itself vigorously against the complaint.”
Far from damaging competition, the acquisition has benefitted Wisconsin dairy farmers by providing a stable and growing outlet for their milk, claimed the company.
It has also produced cost savings that will benefit customers and spark competition around Wisconsin which will increase when the processing plants are fully integrated into the Dean network, it added.
Processing plants
Meanwhile, Foremost Farms USA confirmed that the lawsuit centered on its fluid milk processing plants at Waukesha and De Pere, Wisconsin, and its consumer brands but pointed out that Foremost Farms is not a party to this litigation.
A company statement confirmed: “This decision does not impact Foremost Farms' business operations or strong financial position. Going forward, Foremost Farms will continue to supply bulk fluid milk to Dean Foods according to our mutually agreed upon supply contract.”
Foremost Farms is owned by 2,300 Midwestern dairy farmers.
Dean Foods is one of the US’s biggest food and beverage producers with revenues of $12.5bn in 2008. The firm’s Dairy Group is the nation’s largest processor and distributor of dairy products.
