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Dairy Farmers of America cannot use a law designed to equalize farmers’ bargaining power with companies handling agricultural products to protect themselves from antitrust claims, the Justice Department said in a court filing.

The case involves more than 100 Northeast dairy farmers who opted out of a $50 million class action settlement in 2016, alleging that DFA and its marketing arm “conspired to monopolize the fluid milk market in Northeast,” according to the Organization for Competitive Markets.

Unlike a monopoly, where there is only one seller, a monopsony exists when there is only one buyer.

Congress passed the Capper-Volstead Act in 1922 “to give farmers who produce food greater bargaining power with processors and other businesses that handle food products,” the July 27 DOJ brief states. “It would be inconsistent with the text and purpose of the statute to allow an accused to use [it] as a shield when acting as a food processor or exercising monopsony power to harm individual farmers.

In a “expression of interestfiled in federal court in Vermont, the government said, “To the extent plaintiffs show at trial that DFA violated the Sherman Act by reaping profits as a handler or processor from lower milk prices” , rather than for the mutual benefit of its producer-members, the DOJ said “it would transform the [Capper-Volstead ] Act on his head to allow DFA to use the law as a legal shield.

“Plaintiffs allege that Defendants engaged in several overt acts in pursuit of the alleged conspiracy’s unlawful objective to monopsonize, including, but not limited to: (1) written non-solicitation agreements writings and information sharing regarding farmer compensation programs; (2) supply agreements; (3) most-favoured-nation clauses and pricing; and (4) outsourcing agreements,” says the DOJ filing, then quotes U.S. District Judge Christina Reiss. September Decisionwhich allowed the case to move forward: “The alleged effect of these agreements is ‘to lower the prices paid to dairy farmers for their raw Grade A milk.'”

In answerDFA executive vice president and chief of staff Monica Massey said ‘we are aware of the Justice Department filing and do not see it bearing on the issues the court will decide in our current case. in Vermont”.

In its decision, Reiss said the plaintiffs had provided “admissible evidence from which a rational jury could conclude that the management of DFA favored the growth of its business operations and the building of an empire over the interests of its farmer-members, including through executive compensation and benefits that were not fully disclosed to DFA members and inappropriate payments to DFA board members and regional council members.

“The claims at issue in this case do not fall within the core of the Capper-Volstead protection because they do not involve allegations that agricultural cooperatives have acted anti-competitively against processors and other intermediaries, but rather allegations that agricultural cooperatives – through agreements with processors, middlemen and other cooperatives – have acted anti-competitively against other farmers,” the DOJ said.

Ben Gotschall, CMO Executive Director mentioned his group is “pleased to see a government agency with antitrust authority taking a stand for farmers’ and ranchers’ rights.” The Sherman and Clayton antitrust laws, he said, “have been on the books for over a hundred years, and the DFA lawsuit is an important opportunity for them to be interpreted correctly, as they were intended: to curb abuses. businesses and put an end to anti-competitive behaviors, even if they are committed by cooperatives like DFA.

On whether the outcome of the case can set a precedent, Gotschall said on the CMO’s website: “Once the trial begins, arguments and evidence are presented, and we see the result, we We should learn more about whether this case will set a precedent that will guide other interpretations of antitrust cases in agriculture.

DFA was recently approved for buy Dean Foodsan acquisition that faces its own antitrust lawsuit in North Carolina. Gotschall said Agri Pulse he was unsure whether this transaction would affect the Vermont lawsuit.

“Most of the evidence I saw was for pre-merger activity,” he said. “That said, there may be implications for Dean as they were one of DFA’s biggest clients for the treatment and are uncooperative.”

“Certain business relationships with non-cooperatives would render DFA ineligible for protection under the Capper-Volstead Act and subject them to the application of Section 1 of the Sherman Act,” Gotschall said, citing the DOJ brief.

The trial in this case is scheduled to begin on September 30.

DFA’s Massey explained the company’s reaction to the DOJ filing in a statement.

“The Expression of Interest filed by the DOJ’s Antitrust Division provides its opinion on the Capper-Volstead Act. It is well known and understood that the DOJ is against antitrust exemptions. That said, we are confident that we have operated in the limited exemptions allowed through the Capper-Volstead Act, which allows farmers and cooperatives to work together to sell their products.”

“DFA was formed and is governed by dairy farmers and operates for the sole purpose of bringing value to our family farm owners across the country,” Massey said. “While a small group of disgruntled farmers feel differently, we remain committed to working hard every day to accomplish this mission.”

This article was updated on July 31 to include a response from DFA.

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