Illinois, Wisconsin, and Michigan Attorneys General join in Dean Foods’ antitrust suit

Nick Rees, of Legal News Line online, reports that Illinois Attorney General Lisa Madigan has joined the federal lawsuit “challenging Dean Foods Company’s acquisition of the milk business of one of its major competitors.”

The complaint against Dean Foods, which is being brought by the US Department of Justice’s Antitrust Division and the attorneys general of Michigan, Wisconsin, and Illinois in US District Court in Milwaukee, alleges that Dean Foods’ acquisition of Foremost Farms “substantially reduced competition in the sale of milk to supermarkets, grocery stores and other commercial customers throughout northeastern Illinois, the Upper Peninsula of Michigan and Wisconsin. Retailers, the complaint says, were deprived of the benefits of substantial head-to-head competition between Dean Foods and Foremost Farms as a result of the acquisition.”

As Brent Kendall reports for the Wall Street Journal, this is the first time the “Obama administration’s antitrust team at the Justice Department, led by Christine Varney, has sued to block or undo an acquisition.” Kendall reports that Varney had pledged to look into competition issues in the agriculture industry. Further, the administration could have been motivated to take up this suit because of the potential effect of the acquisition on competition in milk sold to US schools.

According to Kendall, “[t]he lawsuit not only seeks to undo the transaction but also seeks to require that Dallas-based Dean Foods, the country's largest processor and distributor of dairy products, notify the Justice Department at least 30 days in advance before any future acquisition of a milk-processing operation.”

In court documents, antitrust regulators said the acquisition “substantially weakened competition in certain dairy markets” when Dean Foods acquired Foremost Farms USA’s consumer-products division, eliminating a serious competitor even though Dean Foods only acquired two Wisconsin dairy-processing plants from Foremost.

For their part, “Dean Foods’ spokeswoman Marguerite Copel said the company was disappointed the Justice Department chose to challenge the transaction nearly 10 months after it closed. The lawsuit, she said, was ‘unsound, both legally and economically.’. . . ‘We are anxious to have the opportunity to defend this pro-competitive transaction in court,’ Ms. Copel said.”

Foremost Farms is not a party to the lawsuit and would not comment on the suit.

To read the Kendall article in the Wall Street Journal click here.
To read the Legal News Line story click here.

Posted: 01/26/10