Dairy Giants Face Legal Battle Over Alleged Price-Fixing Conspiracy

The two leading dairy farm collectives in the southwestern United States, Dairy Farmers of America and Select Milk, have been denied their attempt to dismiss a proposed class action lawsuit in New Mexico. The lawsuit accuses them of colluding to manipulate prices within the region’s lucrative milk industry, valued at over $3.5 billion annually.

U.S. District Judge Margaret Strickland ruled on Monday that dairy farmers in New Mexico, the majority of Texas, and parts of Arizona, Oklahoma, and Kansas can proceed with their antitrust claims against the dairy giants.

Judge Strickland deemed the plaintiffs’ allegations plausible, suggesting an ongoing conspiracy since 2015 where the defendants unlawfully coordinated price decisions, resulting in dairy farmers being underpaid for their raw fluid Grade A milk production.

The lawsuit, filed by farms and individual farmers in 2022, asserts that dairy farmers were systematically undercompensated in violation of U.S. antitrust laws. This decision opens the door for further legal scrutiny into the pricing practices of these industry behemoths, potentially marking a significant shift in the dynamics of the dairy market in the southwestern U.S.

Responding to the ruling, Dairy Farmers of America expressed disappointment and reiterated their stance against the claims. In a statement, the organization described the allegations as “baseless, irresponsible, and meritless,” asserting their intention to vigorously defend themselves against the lawsuit.

Both Texas and New Mexico rank among the top milk-producing states in the country, highlighting the substantial economic stakes involved in this legal battle.

The outcome of this legal dispute could have far-reaching implications not only for the dairy industry but also for agricultural markets more broadly.

Source: Reuters