Justice Sues to Block Dairy Sale

April 4, 2000

The Justice Department has filed a civil antitrust lawsuit to block Dairy Farmers of America Inc. from acquiring the assets of SODIAAL North America Corp. because the transaction would increase butter prices in the Northeast. The merger would reduce competition in the branded butter in New York and Philadelphia, says Justice.

Agnes Schafer, executive director for corporate relations at DFA, said the cooperative "strongly supports" the acquisition, which she called a "joint venture." She would not comment further since the deal is in litigation.

DFA makes "breakstone" butter and SODIAAL makes "Keller's" and "Hotel Bar."

Justice asked the U.S. District Court in Philadelphia for a temporary restraining order preventing DFA and SODIAAL from finalizing the transaction until the court rules on a motion for a preliminary injunction to prohibit the deal.

"No one should have to pay higher prices for an American staple such as butter," said Joel I. Klein, assistant attorney general in the antitrust division. "Unless this deal is blocked, that's exactly what will happen in the New York and Philadelphia metropolitan areas. We brought this suit to preserve competition by preventing the elimination of a strong independent competitor."

According to the lawsuit, DFA and SODIAAL are two of only three principal suppliers of retail branded butter in the two cities. The complaint states that the two companies compete directly and aggressively on the basis of price, promotional allowances, service, brand support, product improvements and other facets of competition in the sale of branded butter in those areas.