Dairy farmers get $158.6M in price-fixing settlement

KANSAS CITY, Mo. – The Dairy Farmers of America cooperative and several related entities have agreed to pay $158.6 million to settle allegations that they conspired to fixed the price of milk in the Southeast.

The settlement marked the final settlement agreement in the antitrust case that was brought by about 7,000 dairy farmers across 14 states. A trial in the lawsuit was set to begin recently in federal court in Greeneville, Tenn.

Combined with previous settlements in the class-action lawsuit, the dairy farmers have been awarded more than $300 million, according to BakerHostetler, the law firm that represented the plaintiffs. A previous settlement was reached in July 2011 with Dean Foods for $140 million. In addition, a separate, smaller $5 million settlement was reached with the Southern Marketing Agency, which also included requirements to make the milk marketing process more transparent.

“The Southeast milk market has been reformed to the benefit of dairy farmers,” attorney Robert G. Abrams of BakerHostetler said in a news release.

Officials with Kansas City-based Dairy Farmers of America Inc. could not be immediately reached for comment.

As part of the agreement, the Dairy Farmers of America agreed to change its business practices in the Southeast, including “taking steps to increase raw milk prices, removing cancellation penalties on certain … supply agreements with bottling plants and not entering into new supply agreements” in the near term, according to the news release.

The organization also agreed to provide more disclosure involving price-related information and to submit more business practices issues to membership votes.

“The monetary recovery itself is very substantial and the resulting conduct changes will significantly and positively impact competition in the southeast dairy industry,” Abrams said.

The lawsuit alleged that Dean Foods effectively controlled milk prices in the region by allowing the Dairy Farmers of America, through various entities, to manage the milk supply of both its member farmers and independent producers who chose to supply bottlers under separate contracts.