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Dairy co-op will pay $158.6 million in antitrust settlement

Farmers accused Dairy Farmers of America of fixing milk prices

The two parties have finally come to an agreement—ending the last stage of the litigation that dates back four years. The Dairy Farmers of America (DFA), the milk industry’s marketing cooperative, agreed yesterday to pay $158.6 million to settle antitrust accusations. And just in the nick of time—the case was set to go to trial yesterday.

About 7,000 dairy farmers in 14 states sued the co-op in 2009, claiming the organization conspired to fix the price of milk in the southeastern U.S. Combined with other settlements involved in this litigation, the dairy farmers will receive about $300 million.

As part of the agreement, DFA will change its business practices in the Southeast, and will be “taking steps to increase raw milk prices, removing cancellation penalties on certain … supply agreements with bottling plants and not entering into new supply agreements,” the co-op said in a statement. It will also provide more disclosure about pricing and put some business practices up for membership vote.

Robert G. Abrams, partner at BakerHostetler and counsel for the plaintiffs, believes the settlement will have an impact. “The Southeast milk market has been reformed to the benefit of dairy farmers,” he said in a statement.

Despite admitting no wrongdoing, the DFA said that it has worked diligently to “put old issues behind” it. “This outcome positions DFA to fulfill a commitment to our members to resolve pending litigation, to remove a source of distraction for our leadership and to avoid additional legal fees,” the co-op’s CEO, Rick Smith, said in a statement.

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