US co-ops Dairy Farmers of America and Select Milk Producers have agreed to settle a price-fixing case for a combined total of US$34m.
The two co-ops were taken to court by members who allege they “conspired to suppress pay to Southwest Area dairy farmers”.
A preliminary settlement quoted by Reuters and Agri-Pulse, which has received an initial approval by a judge, states that Dairy Farmers of America has agreed to pay $24.5m and Select Milk Producers has agreed to pay $9.9m. The settlement also permits the plaintiffs to withdraw from escrow up to $250,000 in non-refundable class notice and administration costs.
In addition to the monetary payments, DFA agreed to maintain its current antitrust training programme for employees involved in the marketing of raw milk or in the setting of member milk pay prices, to refrain from sharing non-public member milk pay price, and to promote existing educational information and facilitate learning and know-how for its Southwest Area members.
Likewise, Select agreed to institute an antitrust training programme for its executives involved in the marketing of raw milk or in the setting of member milk pay prices; refrain from sharing non-public member milk pay price information between Select and DFA; and provide educational information and opportunities for its members that include an annual web-based presentation for at least the next three years, providing information about milk checks and an opportunity for members to obtain answers to questions about payments.
According to the settlement document, the plaintiffs accused the two co-ops of “unlawfully sharing pricing information”, “driving down take-home pay for dairy farmers through selective”, and “increasingly frequent, non-pooling of milk, and unlawfully coordinating pricing and pricing-related decisions”. They argue these allegations are based on a comprehensive investigation by plaintiffs’ counsel.
Meanwhile, the two co-ops “have steadfastly denied liability and mounted a vigorous defence in all phases of the case and continue to deny any wrongdoing,” reads the settlement document.
“After years of successfully defending our business practices and integrity, Dairy Farmers of America (DFA) has reached a resolution to end a long-running antitrust lawsuit filed by a small group of farmers in the Southwest,” DFA said in a statement.
“While we remain adamant that our actions were legal, ethical, and grounded in our co-operative’s values, the unique complexity of the case – combined with escalating costs and ongoing disruption – made resolving this now the prudent path forward. Ultimately, the cost to continue was higher than the cost to resolve, making this the most logical business decision for the co-operative, despite the strength of our case and our conviction that we would have ultimately prevailed.
“This resolution allows us to move forward with our integrity intact, without distraction, and able to continue our mission of delivering value for our farmer-owners, our employees, and our customers.”
This is the third time DFA has faced legal proceedings over milk-price fixing. In 2015 the co-op agreed to pay $50m to farmers in the northeastern USA who had launched a class action against it. Similarly, in 2013 DFA settled a case involving farmers in the southeastern US for $140m.
The plaintiffs’ legal team from Scott+Scott has declined a request for additional comments on 5 August.
