Appeals court reinstates antitrust suit against Dean Foods of Dallas

Jan. 3, 2014 at 4:24 PM   |   Comments

DALLAS, Jan. 3 (UPI) -- A federal appeals court Friday reinstated an antitrust suit against Dean Foods that alleges the Dallas company conspired to drive up milk prices.

All five counts of the suit, filed by grocery chain Food Lion and others, had been dismissed in summary judgments by a district court, the Dallas Morning News reported.

Court documents indicate Dean Foods was acquired in 2001 by Suiza, the nation's largest milk bottler. At the time, Dean got most of its milk from independent farmers, while Suiza got a large portion of its milk from a subsidiary partially owned by the Dairy Farmers Association.

As part of the merger, the U.S. Justice Department required Suiza to sell its stake in the Dairy Farmers subsidiary.

The association took control of six milk processing plants, which were transferred to a partnership called National Dairy Holdings owned in part by Dairy Farmers and in part by former Suiza executives. The new firm later added more plants and became the second largest milk bottler in the southeast.

Food Lion and the other plaintiffs charged that while National Dairy Holdings was set up to compete with Dean Foods, NDH actually had a conflict of interest because DFA, the part-owner, also had contracts with Dean Foods.

The plaintiffs allege NDH operated some plants at a loss and closed others to protest DFA's business relationship with Dean Foods.

The appellate court's reversal of the lower court's ruling reinstates count one of the suit that alleges the relationship between Dean and the company half-owned by the Dairy Farmers Association was a "conspiracy not to compete."

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