DFA and Dean Foods deal faces antitrust lawsuit

A federal lawsuit has been filed against the Dairy Farmers of America (DFA) challenging its $433 million acquisition of Dean Foods.

The complaint, filed by the Maryland and Virginia Milk Producers Cooperative Association (MDVA) and the Food Lion grocery chain, claims that DFA’s latest acquisition forms part of its “longstanding efforts to seize control of the milk supply chain”.

With the purchase, the plaintiffs believe that DFA will ‘monopolise’ the dairy supply chain which will cause higher prices for consumers and will compel independent dairy farmers to either run out of business or join DFA.

The companies note that this harm will be particularly severe in the areas surrounding milk processing plants in North and South Carolina, where plaintiff MDVA is DFA’s only significant remaining competitor.

Food Lion and the MDVA have requested that the court grant a preliminary injunction to preserve the status quo and require that the DFA divest at least one of the three Dean facilities in the Carolinas to an unaffiliated independent purchaser.

The national dairy co-op had been the frontrunner in the sales process since Dean announced that it was filing for Chapter 11 bankruptcy protection in November last year and it agreed to acquire a “substantial portion” of Dean Foods’ assets and business in February.  

Following a brief ‘termination’ of the deal, DFA was eventually named the winning bidder and agreed to buy the assets relating to 44 of Dean’s fluid and frozen facilities.

However once again, the antitrust concerns that emerged before the sale was approved have continued to surface.

For the past two decades, the lawsuit stated that DFA has “rapidly consolidated and dominated the market for the supply of raw milk” through unlawful conduct and anti-competitive agreements.

Meanwhile, the lawsuit follows the US Justice Department’s approval of the deal.