Monopoly Concerns Surround DFA Acquisition of Dean Foods

Dean Foods, one of America’s largest dairy companies, filed for Chapter 11 bankruptcy last week.  A New Food Economy report says that leaves a lot of dairy producers up in the air about where they’ll be selling their milk in the future. The timing of the bankruptcy couldn’t be worse as milk prices are still low, even though they’ve bounced back somewhat in recent months. In the announcement last week, Dean Foods said it was “engaged in advance talks with Dairy Farmers of America about a possible acquisition.” DFA is the country’s biggest dairy cooperative.  However, one antitrust expert says the potential deal causes serious concerns about anti-competitive activity.

Cooperatives negotiate with processors like Dean Foods on behalf of producers to get the best price they can for their farmers. “The problem with DFA is the conflict of interest that will result from trying to lower prices to farmers to increase their revenue as a milk producer,” says Peter Carstensen, a University of Wisconsin Law School Professor. Some farmers have accused the co-op in the past of trying to suppress milk prices to maximize its profits. Dairy Farmers of America represents over 13,000 dairy producers and controls 30% of the milk production in the U.S.

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