Dairy Company Seeks to Dismiss Food Lion Antitrust Suit

Dairy Farmers of America Inc. is trying to end an antitrust lawsuit filed against them in the Middle District of North Carolina, claiming in a motion to dismiss that the case is speculative and that the Dean Food Company deal was approved by the Department of Justice.

Dairy Farmers of America (DFA) is represented by Womble Bond Dickinson. Food Lion, represented by Hunton Andrews Kurth, filed the antitrust lawsuit on May 19 alleging a purchase of processing plants by the defendant from Dean Food Company was anti-competitive because it would significantly reduce the company’s options for purchasing milk in North and South Carolina by combining DFA and Dean Food Company.

The motion to dismiss alleged that the grocery chain only pled “speculative future injury,” which is not meant to be addressed by antitrust laws. It also claims the “implausibly narrow relevant geographic market” presented in the complaint does not support the plaintiff’s antitrust claim.

Dairy Farmers of America argued the Failing Company Doctrine, which allows a merger that would otherwise be anticompetitive supports their case because the bankruptcy of Dean Foods Company resulted in DFA’s purchase of the dairy plants. It cited a Department of Justice press release from prior to Food Lion’s suit which discusses a settlement involving the acquisition of other milk processing plants.

“Today’s settlement with DFA and Dean will ensure the continued operation of dozens of fluid milk plants and that supermarkets, schools, convenience stores, hospitals, and other consumers of fluid milk are not harmed by the loss of Dean’s processing plants due to its bankruptcy,” the press release states.

Assistant Attorney General Makan Delrahim of the Antitrust Division said in the release that according to a “fast but comprehensive investigation” the agreement preserves competition in New England, Illinois and Wisconsin. The Department of Justice ruled against classifying the purchase as anti-competitive in a separate lawsuit from attorneys general of Massachusetts and Wisconsin.

“This is a tumultuous time for the dairy industry, with the two largest fluid milk processors, Dean and Borden Dairy Company, in bankruptcy, and a pandemic causing demand for milk by schools and restaurants to collapse,” Delrahim said.