Lawsuit calls for divestiture of two Dean Foods plants

Wisconsin Attorney General Josh Kaul and the U.S. Department of Justice and Commonwealth of Massachusetts have filed a lawsuit against Dairy Farmers of America after the company acquired Dean Foods out of bankruptcy in early April.

According to the complaint, filed on May 1, the acquisition of Dean Foods plants by DFA "would further consolidate two highly concentrated fluid milk markets: northeastern Illinois and Wisconsin and New England."

This would leave DFA with almost 70% market share in Northern Illinois/Wisconsin and more than 50% in the New England region, according to the complaint.

The order proposed by Kaul requires that the DFA divest two recently acquired Dean Foods plants – one in Harvard and one in DePere, Wisconsin – to a buyer within 30 days, according to a recent news release.

“I am very happy that we’ve been able to help protect competition in the dairy industry here in Wisconsin,” Kaul said. “While strong competition in the market is always important, it’s incredibly important now, as we’re living through a pandemic.”

DFA and Dean Foods are two of only three competitive options in the Northern Illinois/Wisconsin region’s fluid milk market, according to the complaint. The acquisition of Dean Foods plants by DFA would eliminate their competition, potentially raising milk prices for grocery stores, schools and, ultimately, consumers.

“Our supply chain must have robust competition to ensure a continued supply of milk to those who need it, and milk producers – who were facing a crisis in the dairy industry even before the coronavirus pandemic hit – need to be able to sell milk on fair terms,” he said.

The proposed order also requires that DFA divest the intellectual property associated with the DePere plant which includes exclusive rights to the Dean Foods name in Wisconsin, Illinois, Indiana and the upper peninsula of Michigan.

Intellectual property divestitures also include licenses for the “TruMoo” and “DairyPure” brand names nationwide, according to the release.

The Harvard Dean Foods plant, also known as the Chemung plant, sits on Maxon Road near Beck’s Woods Conservation Area. The plant employed about 100 people until Dean Foods filed for Chapter 11 bankruptcy protection in November 2019.

In early April, a Texas bankruptcy court approved the sale of Dean Foods plants to DFA for a total of $433 million, according to the release.

The buyer of the DePere and Harvard plants will be approved by the U.S. Department of Justice, according to the release.