The Department of Justice, Friday filed a civil antitrust lawsuit against Dean Foods Co. (DF) challenging Dean's April 2009 acquisition of Foremost Farms USA's Consumer Products Division. The DoJ complaint alleges the merger eliminates substantial competition between the two companies in the sale of milk to schools, grocery stores, convenience stores and other retailers in Illinois, Michigan and Wisconsin.
In April, Dean Foods acquired De Pere and Waukesha dairy processing plants of Foremost Farms, a Wisconsin member-owned business association. The transaction was not required to be reported as the purchase price was less than the minimum reporting threshold.
According to the DoJ, the acquisition eliminated an aggressive competitor against Dean Foods as Foremost Farms was the fourth largest milk processor in Wisconsin. Dean Foods now holds about 57% of the market for processed milk in northeastern Illinois, the Upper Peninsula of Michigan, and Wisconsin.
The DoJ also alleged that the transaction reduced competition substantially in the sale of milk to school districts in the UP of Michigan and Wisconsin, as Dean Foods became a monopoly provider.
The acquisition is also alleged to reduce the competition substantially in the sale of milk to supermarkets, grocery stores, and other commercial customers throughout northeastern Illinois, the UP of Michigan and Wisconsin. The Department noted it would now be easier for Dean Foods to coordinate with the remaining milk processors, which will make their decisions more predictable and rational to the company.
Christine Varney, Assistant Attorney General in charge of the Department of Justice'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."
The Department of Justice's Antitrust Division, along with state attorneys general from Illinois, Michigan and Wisconsin, filed the lawsuit in U.S. District Court in Milwaukee, seeking to require Dean Foods to sell the dairy processing plants it acquired from Foremost Farms.
The department's lawsuit also sought to undo the 2009 deal and requires Dean Foods to notify the department at least 30 days prior to any future acquisition involving a milk processing operation.
DF closed Friday's regular trading at $18.48, down 0.03 or 0.16%, on a volume of 3.15 million shares on the NYSE. In after hours, the stock further went down 0.03 or 0.16%, trading at $18.45.
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