Madigan joins antitrust suit

By Nick Rees | Jan 25, 2010


CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan has joined a federal lawsuit challenging Dean Foods Company's acquisition of the milk business of one of its major competitors.

In joining the suit, Madigan called the acquisition a serious antitrust concern that could adversely affect the price of milk for retailers throughout northeastern Illinois.

The lawsuit, filed by the U.S. Department of Justice's Antitrust Division, Madigan and the attorneys general of Michigan and Wisconsin in U.S. District Court in Milwaukee, seeks to require Dean Foods to sell the dairy processing plants it acquired in April from Foremost Farms USA.

According to the complaint against Dean Foods, its 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.

Milk processors like Dean Foods and Foremost Farms purchase raw milk from dairy farms and agricultural cooperatives, pasteurizing and packaging it. The milk is then distributed and sold to school districts, supermarkets, grocery stores and other retail customers.

"Dean Foods' acquisition would eliminate a significant milk supplier for northern Illinois that, until now, helped keep milk prices in check," Madigan said. "Vigorous competition is essential to protecting consumers from skyrocketing prices especially in this tough economy."

The Dallas-based Dean Foods is one of the largest food and beverage producers in the United States, with revenues of $11.8 billion in 2008. Dean Foods' Fresh Dairy Direct is the nation's largest processor and distributor of milk and other dairy products.

The Baraboo, Wis.-headquartered Foremost Farms is a member-owned business association. Its Consumer Products Division had net sales of $233.7 million in 2008.

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