`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
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`_____________________________________
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`Food Lion, LLC, and Maryland and
`Virginia Milk Producers Cooperative
`Association, Inc.,
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`Plaintiffs,
`
`v.
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`Dairy Farmers of America, Inc.,
`
`Defendant.
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`1:20-cv-442
`Case No. ____________________
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`COMPLAINT
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`This action arises out of Defendant Dairy Farmers of America, Inc.’s (“DFA”)
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`longstanding effort to seize control of the milk supply chain. Indeed, for the past two
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`decades, DFA has rapidly consolidated and dominated the market for the supply of raw
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`milk not by competing on the merits, but through unlawful conduct and anti-competitive
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`agreements through which it has gained near-complete control over the purchasing of key
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`nationwide milk processors. This anti-competitive campaign has allowed DFA to
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`transform itself from a modest regional dairy cooperative into the Standard Oil of the
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`modern dairy industry.
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`DFA accomplished this transformation through a mutually advantageous
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`partnership with Dean Foods Company (“Dean”), formerly the nation’s largest processor
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`of raw milk. Their partnership was forged through a corrupt bargain entered into at the
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`time of a prior merger between Dean and another dairy processing giant, in order to avoid
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`U.S. Department of Justice (“DOJ”) scrutiny through subterfuge and deception. The
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`illicit side agreement allowed DFA to secure full-supply rights for its higher-priced raw
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`milk to the newly merged Dean processing plants through a twenty-year exclusive-
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`dealing arrangement, in exchange for an agreement not to compete with Dean at the
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`processing level.
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`Together, these two dairy conglomerates have suppressed competition, raised
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`market concentration, and bolstered each other’s market power ever since, to the
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`detriment of independent dairy farmers at one end of the milk supply chain and customers
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`at the other. Their efforts were mutually reinforcing: the more dominant DFA became in
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`producing and supplying raw milk, the more control DFA and Dean could exercise in
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`contracts for processing milk, the more dominant DFA became in producing and
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`supplying raw milk, and so on, simultaneously eliminating competition in both the milk
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`production and milk processing markets in which each dominated. As a result, both
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`entities were subject to an avalanche of lawsuits targeting their anti-competitive practices,
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`resulting in a series of settlements totaling hundreds of millions of dollars. Nonetheless,
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`DFA’s conduct persisted, and even grew worse, as its grip on the market strengthened.
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`This anti-competitive cycle of harm was set to slow or end in the near future, or so
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`the dairy industry thought. On or about April 2021, the twenty-year exclusive raw milk
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`supply agreement between DFA and Dean that was a key part of the original corrupt
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`bargain—structured as a series of one-year evergreen provisions to avoid a prior DOJ
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`consent decree against DFA’s predecessor—was scheduled to end on its terms. If that
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`happened, DFA’s competitors would finally be able to compete with DFA on the merits
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`to supply raw milk to Dean processing plants across the country.
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`In November 2019, however, Dean announced that it would be filing for Chapter
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`11 bankruptcy, thus accelerating the time when DFA’s iron-fisted grasp over Dean plants
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`would be released. DFA could not let that happen. Instead, to avoid the prospect of
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`competition and protect its market power, DFA engineered a “solution” to permanently
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`solidify and complete its control over Dean’s purchasing decisions by strategically
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`maneuvering to buy forty-four Dean processing plants out of the bankruptcy estate (the
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`“Asset Sale”) at an opportune time. On May 1, 2020, DFA and Dean closed on the Asset
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`Sale, transforming DFA overnight into both the largest milk producer and the largest
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`milk processor in the United States.
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`DFA’s ownership of the majority of the legacy Dean milk processing plants
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`represents the coup de grâce for competition in the relevant fluid milk markets. With
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`capability to wield market power at two levels of the supply chain, DFA now has both the
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`ability and the incentive to wipe out any remaining pockets of competition. This, in turn,
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`will lead inevitably to a durable DFA monopoly over the dairy supply chain, the death of
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`the independent, family-owned dairy farm, and higher prices for consumers who depend
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`on milk for their daily sustenance, especially during the current pandemic. Indeed, as it
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`flexes its newfound muscles as an aspiring monopolist, the fully integrated DFA will
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`compel cooperatives and independent dairy farmers to either join DFA or cease to exist;
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`create an even more difficult environment for new entrants to compete for the supply of
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`raw milk; and in turn further entrench DFA’s control over (and ability to manipulate)
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`both the raw and processed milk supply chains. This harm will be particularly acute in
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`the areas surrounding milk processing plants in North and South Carolina, where plaintiff
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`Maryland and Virginia Milk Producers Cooperative Association, Inc. (“MDVA”) is
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`DFA’s only significant remaining competitor for the supply of raw milk and plaintiff
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`Food Lion, LLC (“Food Lion”) is one of the largest retailers selling milk to consumers.
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`The Asset Sale marks the culmination of DFA’s longstanding, anti-competitive
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`campaign to dominate the fluid milk markets and positions DFA to monopolize the dairy
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`supply chain going forward. Accordingly, to address DFA’s past misconduct and prevent
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`irreversible harm to competition, Food Lion and MDVA bring this action under Section 7
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`of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the Sherman Act, 15 U.S.C. § 2.
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`While Food Lion and MDVA believe that the Asset Sale will substantially lessen
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`competition across the country, this action is narrowly focused on the area in which dairy
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`farmers supply raw milk to, and customers purchase processed milk from, milk
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`processing plants located in North and South Carolina. Plaintiffs request that the Court
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`grant a preliminary injunction that preserve the status quo, protect the relevant assets, and
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`ensure the viability of a divestiture remedy until the conclusion of this matter. Plaintiffs
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`further seek permanent injunctive relief requiring DFA to divest at least one of the legacy
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`Dean facilities in the Carolinas to a viable, qualified, and independent purchaser
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`unaffiliated with DFA, as is necessary to promote competition in the milk supply chain
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`going forward. Without such remedies, competition in the raw and processed milk
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`markets in the region will be lost forever.
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`THE PARTIES
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`1.
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`Plaintiff Food Lion is a North Carolina limited liability company
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`headquartered in Salisbury, North Carolina. It operates more than 1,000 supermarkets,
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`either directly or through affiliates, in ten states, including approximately 600
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`supermarkets in North and South Carolina and dozens more that purchase fluid milk from
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`milk processing facilities in the Carolinas. Food Lion purchases processed fluid milk in
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`interstate commerce and is one of the largest retail purchasers of processed fluid milk
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`from processing facilities in North and South Carolina.
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`2.
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`Plaintiff MDVA is a corporation organized and existing under the laws of
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`the Commonwealth of Virginia with its principal place of business in Reston, Virginia.
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`MDVA is a dairy cooperative with approximately 950 member farms in eleven states
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`throughout the Mid-Atlantic and Southeast. MDVA also owns two fluid milk processing
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`facilities outside of the Carolinas and two plants that produce bulk dairy ingredients for
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`food manufacturers.
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`3.
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`Defendant DFA is a dairy cooperative organized and existing under the
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`laws of the State of Kansas, with its principal place of business in Kansas City, Missouri.
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`DFA is the largest dairy cooperative in the United States, representing over 14,000 dairy
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`producers in forty-eight states and recognizing $13.6 billion in revenue in 2018. In the
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`wake of the Asset Sale, DFA is also the nation’s largest processor and direct-to-store
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`distributor of fluid milk and other dairy and dairy case products. Now DFA not only
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`engages in the production and marketing of raw milk, but it also manufactures, markets,
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`and distributes processed milk to retailers, distributors, foodservice outlets, educational
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`institutions, and governmental entities across the country, including from its legacy Dean
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`plants in High Point, North Carolina; Winston Salem, North Carolina; and Spartanburg,
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`South Carolina.
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`JURISDICTION, VENUE, AND INTERSTATE COMMERCE
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`4.
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`This Court has subject-matter jurisdiction over this action pursuant to 15
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`U.S.C. § 26; 28 U.S.C. § 1331; and/or 28 U.S.C. § 1337(a).
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`5.
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`This Court has personal jurisdiction over DFA under 15 U.S.C. § 22,
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`because DFA may be found and regularly transacts business in this judicial district.
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`6.
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`Venue is proper in this judicial district under 15 U.S.C. § 22 and 28 U.S.C.
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`§ 1391(b) and (c), because DFA may be found and regularly transacts business in this
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`judicial district. Two of the three legacy Dean milk processing facilities at issue in this
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`Complaint are located in this judicial district, and the anticompetitive effects of the Asset
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`Sale will be felt throughout this judicial district.
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`7.
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`DFA is engaged in, and its activities substantially affect, interstate
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`commerce, and the conduct alleged herein substantially affects interstate commerce.
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`Among other things, DFA purchases, markets, processes, and ships milk across state
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`lines. DFA receives substantial payments across state lines for the sale of raw and/or
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`processed milk. DFA’s acquisition of three legacy Dean processing facilities in North
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`and South Carolina will have adverse effects on competition and consumers, including
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`for the production and processing of fluid milk sold, in the region.
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`RELEVANT MARKETS
`The Relevant Product Markets
`There are two relevant product markets at issue in this case.
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`The first market is an upstream market for the supply of raw Grade A milk
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`8.
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`9.
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`(“raw milk”) by dairy producers, in which both DFA and MDVA compete, to milk
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`processing plants like the legacy Dean facilities (the “raw milk market”).
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`10.
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`The second market is the downstream market for the processing, co-
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`packing, and delivery of fluid milk products to retailers like Food Lion and other
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`customers (the “processed milk market” or “processed fluid milk market”).
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`11.
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`The milk industry, including DFA and Dean, treat these two product
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`markets as being distinct in the ordinary course of business. These relevant product
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`markets also have been treated as being distinct by federal courts in prior litigation
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`involving DFA and Dean.
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`12. Raw milk is a fungible, homogenous, and highly perishable commodity.
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`Dairy farmers milk their cows at least twice a day and the milk must be transported from
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`farms to milk processors nearly every day and sometimes multiple times a day. Raw
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`milk is typically stored in refrigerated tanks until it is picked up by a milk hauler who
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`transports it in insulated trucks to milk processing plants. Milk processing plants process
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`this milk for human consumption and package it for wholesale or retail sale.
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`13.
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`Federal milk sanitation standards distinguish between milk eligible for use
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`in fluid products—called raw Grade A milk—and milk eligible only for manufactured
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`dairy products. Pursuant to the 1937 Agriculture Act, the U.S. Dairy Association
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`(“USDA”) classifies raw Grade A milk as milk that qualifies for use in fluid milk
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`products for human consumption. The highest standards are established for raw Grade A
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`milk because of safety risks associated with fluid milk products.
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`14.
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`Each month, the USDA calculates minimum prices pursuant to its formula
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`for raw milk marketed in different geographic regions, known as Federal Milk Marketing
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`Orders (“FMMO”). Currently, there are ten FMMOs. The milk processing facilities at
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`issue in this Complaint are included in FMMO 5.
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`15. USDA regulations mandate that cooperatives and independent dairy
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`farmers participating in the FMMO program receive at least the weighted uniform
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`average or minimum “blend” price for raw Grade A milk that is “pooled” on an Order.
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`Dairy farmers “pool” raw Grade A milk on an FMMO by delivering specified minimum
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`quantities of such milk to USDA-regulated fluid milk processing plants associated with
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`that FMMO.
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`16. USDA minimum prices for raw Grade A milk represent the minimum
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`prices that milk processors must pay for such milk marketed pursuant to USDA
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`regulation. These minimum prices, however, are less than the farmers’ cost to produce
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`the milk. Farmers must sell their raw milk for more than these minimum prices in order
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`to survive.
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`17. On the processed milk side, consumers have long-held cultural and taste
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`preferences for processed fluid milk over other beverages, and processed fluid milk has
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`particular nutritional benefits and qualities for use in cooking. Consequently, consumer
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`demand for processed fluid milk is relatively inelastic; that is, processed fluid milk
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`consumption does not decrease significantly in response to a price increase. Fluid milk is
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`distinct from extended shelf-life milk, ultra-high temperature milk, and aseptic milk,
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`which are produced by different processes, have numerous significant differences, and
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`generally cost significantly more than fluid milk.
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`18. Retailers, supermarkets, distributors, and other processed fluid milk
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`customers are unlikely to substitute other products for fluid milk because the individual
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`consumers that they serve continue to demand fluid milk.
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`19. Dairy farmers and dairy cooperatives sell raw milk to milk processors who
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`have no feasible substitutes. Similarly, milk processors sell processed fluid milk to
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`retailers, who can sell other beverages, but none that are good substitutes for fluid milk.
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`20.
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`The markets for raw and processed fluid milk satisfy the well-accepted
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`“hypothetical monopolist” test set forth in Part 4.1 of the DOJ and Federal Trade
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`Commission 2010 Horizontal Merger Guidelines, and incorporated by reference into Part
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`2 of the Draft Vertical Merger Guidelines (released for public comment on January 10,
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`2020). A hypothetical monopolist of raw milk could impose a small but significant non-
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`transitory increase in price (“SSNIP”) to milk processors. Processors have no reasonable
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`substitute for raw milk that would render a SSNIP on raw milk unprofitable. A
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`hypothetical monopolist of processed milk could impose a SSNIP to customers of
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`processed milk, such as grocery retailers. Retailers and other processed milk customers
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`could not turn to purchasing other products in sufficient quantity or numbers to render a
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`SSNIP on processed milk unprofitable.
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`The Relevant Geographic Market
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`21.
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`The relevant geographic market in this action for both the supply of raw
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`milk and its processing and co-packing consists of the milk processing plants in North
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`and South Carolina. Dairies and cooperatives to which these plants may reasonably turn
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`for supply of raw milk for these facilities are included in the geographic market for raw
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`milk. Similarly, customers of processed milk including retailers that can reasonably turn
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`to these facilities for the purchase of processed milk are included in the geographic
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`market for processed milk.
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`22.
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`Transportation costs and perishability limit the distance over which raw
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`milk can profitably be shipped. As stated above, farmers generally milk their cows at
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`least twice a day, and the milk must be stored in refrigerated tanks and transported to
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`milk processors nearly every day and in some cases multiple times a day. Raw milk is
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`highly perishable and is costly to transport because it must be shipped in insulated tanks.
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`Shipping costs are estimated to increase by approximately $0.10 per gallon for every
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`additional 100 miles shipped. This makes the need to transport milk to the closest
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`processing facility even more important in order to manage transportation costs.
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`23.
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`The region surrounding the milk processing facilities in North and South
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`Carolina has two geographic features that limit the region within which milk can
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`reasonably and profitably be shipped to and from milk processing facilities: the Atlantic
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`Ocean to the East and the Appalachian Mountains to the West. Shipping across the
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`Appalachian Mountains is not economically feasible because of the transportation costs
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`associated with crossing the mountains.
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`24.
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`The economic and transportation costs of shipping milk dictate that the
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`long-term viability and overall competitiveness of a dairy cooperative supplying raw milk
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`to a milk processor in the Carolinas relies on the cooperative’s ability to transport its
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`members’ milk to a local processing facility.
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`25.
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`These geographic and cost constraints leave dairy producers located near
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`the processing facilities in North and South Carolina with only six processing and
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`packaging facilities to which to sell raw milk: (1) the legacy Dean (now DFA) facility in
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`Winston-Salem, North Carolina; (3) the legacy Dean (now DFA) facility in High Point,
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`North Carolina; (3) the legacy Dean (now DFA) facility in Spartanburg, South Carolina;
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`(4) Kroger’s Hunter Farms facility in High Point, North Carolina; (5) Ingles’ Milkco
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`facility in Asheville, North Carolina; and (6) the Borden Dairy Co. facility in Charleston,
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`South Carolina. Because geographic and transportation costs also constrain the shipment
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`of processed milk, downstream purchasers of processed milk also rely on nearby milk
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`processing facilities. Below is a map identifying these facilities’ respective locations.
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`Figure One: Milk Processing Facilities in the Carolinas
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`26. A hypothetical monopolist of cooperatives and independent dairies selling
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`raw milk to the processors located in North and South Carolina could impose a SSNIP.
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`This is because the high transportation costs associated with raw milk mean that
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`processors cannot turn to more distant cooperatives to defeat a SSNIP.
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`27. A hypothetical monopolist of milk processors located in North and South
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`Carolina could impose a SSNIP in price to customers such as retailers. This is because
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`retailers, collectively, would not be able profitably to offset such a price increase by
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`shipping milk from more distant milk processors. Even if some customers closer to the
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`market boundary did find it economical to substitute more distant processors, this would
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`not be sufficient to offset the aggregate profitability of a price increase.
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`DFA’S CONSOLIDATION OF THE U.S. DAIRY INDUSTRY
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`Milk Cooperatives
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`28.
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`The dairy industry in the United States is highly concentrated, at both the
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`raw milk producer and processor levels, and has become increasingly concentrated over
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`time as DFA has sought to monopolize the dairy supply chain.
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`29. Dairy cooperatives are associations of dairy farmers who agree to market
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`collectively their raw milk. Cooperatives are supposed to be voluntary associations—
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`owned, operated, and controlled by their farmer members. Cooperatives “market” their
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`farmers’ raw milk, which usually consists of locating buyers, negotiating sales prices,
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`coordinating hauling, performing testing, recording and reporting related data to milk
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`market regulators, and paying member farmers for their raw milk.
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`30. One of the key responsibilities of cooperatives is to negotiate prices higher
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`than the FMMO minimum prices. The amounts by which prices paid for raw Grade A
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`milk exceed FMMO minimum prices are known generically as “over-order premiums.”
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`Access to milk processing plants in North and South Carolina and receipt of FMMO
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`minimum prices and over-order premiums are necessary and essential to the economic
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`viability of dairy farmers in the region.
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`31. Not all dairy farmers are cooperative members. Some dairy farmers seek to
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`remain independent of cooperatives and are referred to as “independent dairy farmers.”
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`Independent dairy farmers seek to market their raw milk to fluid milk processing plants
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`by contracting with processing plants either directly or through agents and/or marketing
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`associations. Many independent dairy farms are family-owned and operated and have
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`been so for generations.
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`32. On January 1, 1998, DFA, a new marketing cooperative, was created from
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`the merger of four competing dairy cooperatives. By 2000, DFA had emerged as the
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`largest dairy cooperative in the United States and controlled more than 50% of the raw
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`Grade A milk produced in the Southeast United States.
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`33.
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`Today, DFA is still the largest dairy cooperative and raw milk producer in
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`the United States. DFA’s members, all of which are producers of raw milk, include both
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`individual dairy farmers and other member-owned milk marketing cooperatives. In 2018,
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`DFA produced 52.7 billion pounds of raw milk—approximately 30% of all raw milk
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`produced in the United States—making it more than three times larger than the next
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`largest dairy cooperative, California Dairies Inc., which is a DFA partner. DFA had 2018
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`revenues of $13.6 billion. DFA recently started issuing non-voting preferred stock, and
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`its equity from this stock comprises a large portion of DFA’s total equity.
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`34.
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`Through various transactions, partnerships, joint ventures, and contractual
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`relationships, DFA has expanded its dominance of the milk supply chain, establishing
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`vertical relationships and interests in everything from production, to processing, to
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`delivery. Thus, DFA currently controls two critical product markets within the milk
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`supply chain—production and processing—in many of the geographic markets in which
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`it operates. Until the Asset Sale was consummated, the geographic region at issue in this
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`Complaint remained one in which DFA was not yet fully integrated.
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`35. MDVA is a dairy cooperative with approximately 950 member-farms in
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`eleven states throughout the Mid-Atlantic and Southeast. As a cooperative, MDVA
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`supports its farmer-members by locating raw milk buyers, negotiating sales prices,
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`coordinating hauling, performing testing, recording and reporting related data to milk
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`market regulators and processors, and by paying member farmers for their raw milk.
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`36.
`
`In 2018, MDVA produced approximately 1% of the raw milk in the United
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`States. To compare their relative size, MDVA sold 2.9 billion pounds of raw milk in
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`2018 compared to DFA’s 52.7 billion pounds, making MDVA only the thirteenth largest
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`dairy cooperative in the United States. MDVA nevertheless acts as a competitive
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`constraint on DFA in the states in which MDVA operates. In the market for the
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`production and supply of raw milk to processing facilities in the Carolinas, MDVA is the
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`only significant competitive constraint on DFA.
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`Milk Processors
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`37. Milk processors process raw milk purchased from cooperatives,
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`independent dairy farmers, or other supply plants into pasteurized milk for human
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`consumption. Processors process milk into a variety of fluid products including whole
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`milk, fat-free or skim milk, low and reduced-fat milk, chocolate milk, buttermilk, and
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`cream. The processed milk is then packaged into a variety of consumer containers
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`including gallon jugs, half-gallon cartons, and other smaller packages. Milk processing
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`plants then sell the processed milk to retail outlets, like Food Lion, and other customers.
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`38. Milk processors include independent processing plants, processors owned
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`by cooperatives or in joint ventures with cooperatives, and retail supermarket chains that
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`own their own processing plants. The processing plants of supermarket chains process
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`and bottle milk primarily for the retail banners owned by that chain.
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`The Old Dean/Suiza Merger and the Corrupt Bargain
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`39. DFA’s rise from regional dairy cooperative to a two-level dairy industry
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`monopolist began with a “corrupt bargain” struck in 2001, just as DFA was emerging as a
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`national cooperative.
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`40.
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`In 1996, there were 62 milk processing plants in the Southeast United
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`States. Following a series of acquisitions, a Texas-based dairy company named Suiza
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`Foods had become the largest fluid milk processor in the United States. At the time,
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`Suiza owned 67 milk processing plants in 29 states with net sales of more than $5 billion.
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`41.
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`Following its own series of acquisitions, a company that had the same name
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`as Dean, referred to herein as “Old Dean,” had become the second-largest buyer of raw
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`milk and the second-largest bottler of processed milk in the United States, operating 43
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`dairy processing plants in 19 states and with net sales of approximately $4.4 billion.
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`42. By 2001, DFA was the largest dairy producer in the United States, Suiza
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`was the largest processor, and Old Dean was the second-largest processor. DFA was
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`supplying raw milk to Suiza, while independent dairy farmers supplied raw milk to Old
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`Dean. Suiza’s supply costs from DFA were significantly higher than Old Dean’s
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`independent sources of milk supply.
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`43.
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`In 2001, Suiza Foods announced a plan to merge with Old Dean and to
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`thereafter operate the merged company under the name Dean Foods Company. The
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`merger between the two processors has been described as “a case study in how
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`unchecked mergers beget abusive monopolies that harm both farmers and consumers.”
`
`Claire Kelloway, The Monopolization of Milk, How America’s Biggest Dairy Co-op is
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`Trying to Become Even Bigger. WASHINGTON MONTHLY, Nov. 21, 2019, available at
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`https://washingtonmonthly.com/2019/11/21/the-monopolization-of-milk/.
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`44.
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`In connection with the merger, the parties entered into a “corrupt bargain”
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`consisting of two side deals: Suiza and Old Dean agreed to a long-term, exclusive-dealing
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`arrangement in which the newly merged Dean entity would exclusively buy all of its raw
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`milk from DFA (and thus incur a higher milk supply cost) for twenty years. DFA, in
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`return, agreed that the divested milk processing plants it owned as part of a DOJ-
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`mandated competitive constraint on the merger would not, in fact, compete with the
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`newly merged Dean. In essence, DFA agreed not to compete with Dean at the processing
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`level in exchange for gaining full supply rights to the combined company. Although the
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`DFA plants were supposed to compete with Dean for business in the Southeast, for
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`example, DFA would only submit “fake” or “no” bids to Food Lion, even though Food
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`Lion was a significant potential customer for both companies.
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`45.
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`In its review of the merger, the DOJ raised, among other matters, the
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`following two concerns relating to post-merger competition: (1) the need for open
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`competition for the supply of raw milk to the newly created milk processing company,
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`Case 1:20-cv-00442-CCE-JLW Document 1 Filed 05/19/20 Page 17 of 56
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`and (2) the need for Dean to divest certain plants to preserve competition at the milk
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`processing level.
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`46.
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`The first concern was driven both by an analysis of the then-current state of
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`competition among milk producers, as well as by the fact that DFA was a party to a 1977
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`consent decree limiting its ability to enter into contracts for the sale of raw milk with a
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`duration more than one year. To address this concern, however, the parties to the merger
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`made a deceptively limited presentation to the DOJ by disclosing a series of milk supply
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`contracts between DFA and Dean. Those contracts each contained a one-year term,
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`which would be renewed in successive years if not terminated by the parties, and
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`“competitive pricing clauses” that would allow Dean to purchase milk from lower-cost
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`providers.
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`47. But the parties hid from the DOJ that they also had entered into an unlawful
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`separate agreement—a promissory side note—that imposed the very restriction on
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`competition for raw milk purchases they said did not exist. On December 21, 2001, Dean
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`issued a contingent, subordinated promissory note to DFA in the original principal
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`amount of $40 million (the “Side Note”). The Side Note had a twenty-year term that
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`bore interest based on the consumer price index. Interest would not be paid in cash but
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`would be added to the principal amount of the note annually, up to a maximum principal
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`amount of $96 million. The Side Note would become payable only if Dean materially
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`breached or terminated its milk supply agreement with DFA without renewal or
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`replacement. Otherwise, the Side Note would expire in April 2021, without any
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`obligation to pay any portion of the principal or interest.1 The Side Note thus effectively
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`created a $96 million penalty if Dean did not purchase its raw milk from DFA,
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`notwithstanding the terms of the relevant supply contracts.
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`48.
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`The quid pro quo for this Side Note was a second illegal side agreement
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`that prevented competition between Dean and the processing plants being divested by
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`Dean in the merger—undermining the second concern raised by the DOJ. In connection
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`with the merger, the parties created a new company, controlled by DFA, that would own
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`the milk processing plants divested in connection with the merger. They simultaneously
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`entered into an illegal non-compete agreement pursuant to which those divested plants
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`would not compete vigorously with Dean (the “Horizontal Non-Compete”). In other
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`words, at the same time the merging parties were holding these plants out to the DOJ as
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`viable plants that would preserve competition, they had agreed secretly that they would
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`not vigorously compete. They were in fact aware at the time of the merger that some of
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`those plants would close shortly after the merger.
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`49.
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`To keep the secret, DFA went to great lengths to avoid detection and
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`handsomely rewarded members of the conspiracy in order to buy their loyalty. See
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`generally Leah Douglas, How Rural America Got Milked, WASHINGTON MONTHLY,
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`1 See In re Southern Foods Group, LLC, et al., No. 19-36313-H2-11, ECF No.
`1883 (Bankr. S.D. Tex.) (hereinafter “Bankr. Dkt.”) at 67:21; Dean Foods Company,
`2019 Form 10-K (Mar. 20, 2020), https://ir.deanfoods.com/sec-filings/sec-filing/10-
`k/0000931336-20-000006.
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`Case 1:20-cv-00442-CCE-JLW Document 1 Filed 05/19/20 Page 19 of 56
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`Jan./Feb./Mar. 2018, available at https://washingtonmonthly.com/magazine/january-
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`february-march-2018/how-rural-america-got-milked/.
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`Anti-competitive Effects of the Corrupt Bargain, and Related Litigation
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`50.
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`The Side Note and other related anti-competitive conduct by DFA have
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`materially harmed competition in the relevant markets and beyond throughout its almost
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`twenty-year life.
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`51.
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`Immediately after the