By Thomas Catan | Updated January 10, 2013, 9:07 p.m. ET
The Obama administration’s first antitrust case was filed with great fanfare in 2010 against Dean Foods Co., forcing the company to divest itself of a milk bottling plant to preserve competition in three states.
But that maiden enforcement action turned sour last weekend after the new owners shut the Waukesha, Wis., plant without warning, throwing more than 100 employees out of work and briefly threatening milk deliveries to regional schoolchildren.
The episode raised questions about the effectiveness of the administration’s first antitrust suit, which to date is its only significant one in agriculture.
Some critics said Dean Foods might have run the plant more successfully than the private-equity buyer, while others said the Justice Department’s action may have simply delayed the plant’s inevitable closing, causing unnecessary costs and disarray.
More at the link.
Your Editor wonders how many of those 100+ employees voted for the re-election of President Obama; the President received 1,613,950 votes, 52.8% of the total, from the Badger State, so it appears likely that at least some of those now-former employees cast their votes for the man who forced Dean Foods to divest their workplace from the larger company.
It is certainly possible that the dairy might have been shut down even if Dean had retained it. However, some major companies like Dean have been known to offer other positions within the company to workers at units being shut down; such might have limited the impact in Waukesha.
The U.S. Department of Justice – along with attorneys general in Wisconsin, Illinois and Michigan – had raised concerns that Dean Foods would have too much of a share of the school milk supply in Wisconsin and Michigan’s Upper Peninsula.
As a result, they required Dean to sell the Waukesha plant while allowing it to retain its dairy processing plant in De Pere, just south of Green Bay.
De Pere is a bit less than 100 miles from Waukesha; one can’t know if any of the Waukesha employees would have opted to transfer to Dean’s De Pere facility if offered the chance to do so. Such would probably depend on the other circumstances for such employees, concerning family and whether they were homeowners or renters, or whether they might have already been commuters from closer to De Pere. But now, that option is simply closed to them. Then again, the Golden Guernsey dairy processing plant might not have closed at all; a larger company like Dean might have had the management resources to enable them to cut overhead expenses and continue to operate the plant.
But the whole notion of an antitrust action against a dairy company is ridiculous, given that the federal government has run a dairy price support program for decades, and the so-called fiscal cliff deal included a provision which would have prevented dairy prices from doubling due to a federal dairy price floor buying program which was established in 1949. If that legislation were simply repealed, the price of milk would probably drop from the current price support levels.
So, what do we have? We have a completely cockamamie program which:
- Provides basic support price levels to dairy farmers, by mandating federal dairy product purchases above a statutory minimum; and
- Continuing, temporary revisions in that price support level, which keeps prices artificially high, but lower than what would have been required under the 1949 law.
So, the Department of Justice files suit, to prevent a company from having a monopoly on milk in a given area, to prevent the company from having the leverage to charge too high a price, while the Department of Agriculture maintains a program to keep the price of milk artificially high, while the Congress has to continually revise the price support program to prevent the artificially high price from doubling.
Brilliant, just plain brilliant.