Dean Foods Co., which is accused of conspiring to manipulate milk prices in three separate lawsuits filed in federal court in Tennessee, says industry competition is “alive and flourishing” is “confident” the company is in full compliance with U.S. antitrust laws.
“We have every incentive to ensure that independent dairy farmers are economically viable,” Dean Foods’ spokeswoman Liliana Esposito said in a Feb. 21 e-mail in response to a question on the three lawsuits.
“We believe farmers have many outlets for their raw milk at competitive prices,” Esposito said. “We also continue to face substantial competition in the sale of processed milk products.”
According to one of the lawsuits, filed on behalf of Virginia-based Scott Dairy Farm and several other plaintiffs, Dean Foods and others allegedly agreed to not compete for the purchase of raw Grade A milk in the Southeastern U.S., effectively fixing the prices paid to independent dairy producers in the region.
The defendants’ actions “enables them to enjoy the economic benefits that flow from conspiring to operate an unlawful cartel,” according to a copy of the lawsuit, which was originally filed in August 2007.
Dean Foods and the other defendants “each can pay stabilized and artificially low prices to Southeast dairy farmers with the comfort of knowing that its horizontal competitors are paying the same price,” the lawsuit said.
The lawsuit, which was granted class-action status, is scheduled to be tried starting June 21 in U.S. District Court for Eastern Tennessee. Dairy Farmers of America, Inc., National Dairy Holdings, L.P., and Mid-Am Capital LLC are also named as defendants.
Some dairy producers in the Southeast have complained there is little competition among buyers for their milk, partly because large processors bought or shut down bottling plants as the industry consolidated. With feed and other production costs rising, many producers say they are barely breaking even.
A lack of choices is part of the problem, said Paul Sorrell, who owns Bittersweet Dairy near Cox’s Creek, Ky.
“The biggest issue really is… the lack of competition from buyers,” Sorrell said in a December story in the Kentucky Standard. “There’s been so much consolidation in the dairy industry.”
In December, Dallas-based Dean Foods, the largest U.S. dairy processor, offered to pay $30 million to settle a similar case with Northeastern dairy farmers. But Dean Foods says the company views the Southeastern cases separately.
Regarding the Tennessee lawsuits, Dean Foods is “confident that we conducted our business in full compliance with all antitrust laws,” spokeswoman Esposito said.
“For our business to be viable, we must have a reliable supply of high quality, fresh milk,” she said. “And, we must be able to buy raw milk at reasonable prices that allow us to supply fresh drinking milk to our customers at prices that consumers can afford.”
“We are confident an objective review of the facts will reveal competition is alive and flourishing in the dairy industry,” Esposito said.
Attorneys for plaintiffs in the lawsuits reached today declined to comment.