The U.S. District Court, Eastern District of Kentucky (London Division), ruled recently that Southern Belle Dairy (Southern Belle) and Dairy Farmers of America, Inc. (DFA) did not violate the antitrust laws in 2003. The complaint, filed by the U.S. Department of Justice (DOJ) and the Commonwealth of Kentucky, alleged that DFA's partial acquisition of ownership interest in Southern Belle, a milk processing facility in Somerset, Ky., violated Section 7 of the Clayton Act.
In this lawsuit, the DOJ alleged that DFA's joint venture relationships with Southern Belle and a National Dairy Holdings (NDH) Flav-O-Rich plant in London, Ky., had given DFA the opportunity to substantially reduce future competition in the sale of milk to Kentucky and Tennessee schools.
Yesterday's Court ruling acknowledged that DFA is not involved in the day-to-day operations or management decisions of its joint ventures with Southern Belle or NDH. The Court found that DFA's ownership interest in these partnerships did not create greater "incentives and opportunities for collusion."
In its order granting the summary judgment, the Court stated that, based on the limited nature of DFA's ownership in Southern Belle, DFA does not have the ability to make decisions regarding the sale of school milk.
"... because DFA is not involved in day to day operations of either Southern Belle or National Dairy Holdings (NDH)." The Court found that the incentives and opportunities for collusion "are not substantially greater by virtue of DFA's duo ownership interest than they were prior to this challenged acquisition."
According to David Geisler, DFA's legal counsel, DFA welcomes the Court's ruling. "DFA invests in fluid milk processors to accomplish two objectives - to allow our dairy farmer members to participate in the profits earned from the sale of finished dairy-based products and to secure an outlet for their raw milk," says Geisler