Vermont AG seeks clues on dairy monopoly claims

[December 15, 2009]  MONTPELIER, Vt. (AP) -- Vermont's attorney general said Monday he wants more information from dairy farmers who say they have been squeezed by milk processors, and that he will review whether to take action or ask federal authorities to investigate the alleged anticompetitive activity.

Attorney General William Sorrell said he needs firsthand comments from farmers, which his office will submit to the U.S. Department of Justice.

"So the issue here is really to try to hear from those most directly affected by how the dairy industry -- from production through processing through distribution -- is working and really to gather facts," Sorrell said.

"Once we have those facts then decide where there's something for us to do alone or in concert with other states and or to pass it along" to federal officials, he said.

In October, a dairy farmer from Vermont and another from New York launched a class action suit claiming that Kansas City-based Dairy Farmers of America and Dallas-based Dean Foods Co. monopolized the milk market, manipulated it by fixing prices and created an economic crisis in the dairy industry across the northeast.

DFA's marketing affiliate Dairy Marketing Services and HP Hood also were named as defendants.

"The allegation is that those defendants have coerced farmers into joining DFA in order to get access to bottling plants that are owned by Dean Foods," said Sarah London, an assistant attorney general. "And also that all of these defendants have conspired to artificially lower the price of milk paid to farmers."

Washington-based law firm Cohen Milstein, which is representing the farmers in the lawsuit, says dairy farmers across the region have expressed interest in the case.

The Justice Department and U.S. Department of Agriculture have scheduled five workshops around the country next year to explore competition and regulatory issues in the agriculture industry.

U.S. Assistant Attorney Gen. Christine Varney says the Justice Department's antitrust division recognizes the dairy market has experienced considerable consolidation and that questions exist about its state of competition.

"The division has considerable expertise in this area and we continue to look very carefully at developments in dairy markets," she said in October.

The attorney general's office said it plans to submit comments on what farmers believe is happening in Vermont to the Department of Justice and is encouraging them to submit their experiences themselves. The department has set a Dec. 31 deadline.

DFA, Dean Foods, and HP Hood, have denied the accusations. Dean Foods said it has conducted its business in full compliance with all antitrust laws and will defend itself vigorously against the complaint.

In Vermont, the amount paid to dairy farmers dropped to about $11 per 100 pounds of milk in June from $19 a year earlier while production costs remained at about $17 per 100 pounds.

[Associated Press; By LISA RATHKE]

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