DOJ Stumbling Out Of The Gate On Antitrust In Ag

Michael Sykuta —  9 April 2010

Wednesday, April 7, J.P. Stadtmueller, U.S. District Court Judge for the Eastern District of Wisconsin, gave the green light for DOJ’s antitrust case against Dean Foods to move forward. Dean had filed a motion to dismiss based on its assertion that the DOJ had failed to provide sufficient evidence to support the DOJ’s antitrust claim and had failed to provide a sufficiently specific definition of the relevant market in which the anti-competitive effects were alleged to exist.  Stadtmueller concludes his ruling by stating:

In today’s world, structural issues, together with a lack of specificity in content associated with the underlying complaint, simply do not measure up to that which any court would reasonably expect in draftsmanship from an experienced litigator.3 That said, the court finds these shortcomings not to be of sufficient magnitude to warrant either dismissal or a more definite statement. In the end, although not well structured, all relevant factual predicates have been pled allowing Dean to reasonably respond to the complaint.

Several news sources have commented on Stadtmueller’s criticism of the DOJ’s shoddy work (for a few examples see here, here, or here). While the merits of the case (both the original complaint and Dean’s motion) are debatable in their own right (more later perhaps), what struck me about Stadtmueller’s opinion is this criticism of the DOJ. 

At the inaugural Antitrust in Ag workshop in Ankeny, IA,  last month,  DOJ officials made much of their having brought the complaint against Dean Foods. Attorney General Eric Holder specifically referenced Dean Foods in his opening remarks: “In January we filed a lawsuit that challenged Dean Foods’ acquisition of two dairy processing plants from Foremost Farms that inflicted higher milk prices on consumers.” (Perhaps Mr Holder has some evidence tucked away to which the attorneys who wrote the complaint couldn’t get specific references?) Assistant AG Christine Varney echoed Moller in her opening comments (see the full text here).  And the very last speaker of the day, Assistant Chief of DOJ’s transportation, energy and ag (TEA) section William Stallings defended against assertions that DOJ may not be paying enough attention to the agriculture sector saying,

[W]hen we do find facts that support a reason to challenge a merger, we will do so, and as Assistant Attorney General Varney said today, you know, we just two weeks ago sued to unwind a Dean Foods milk merger. So…of the litigated challenges to mergers in the past few years, JBS and Dean Foods, both agricultural ones, both — I think there was one other one that was litigated, but you can tell that the focus is on agriculture, and we are serious about that focus.

When a complaint that is touted so highly by top DOJ officials is slammed by the judge as being exceedingly vague and so poorly structured, one has to wonder not only about the quality of this complaint but of this DOJ administration’s judgment.  While not a complete fall, they are certainly stumbling on their banner case.

So with that in mind, I’ll leave you to consider Ms. Varney’s closing comments from Ankeny:

So you have my commitment that we’re going to do everything we can to make sure that it’s a competitive agriculture economy, that farmers, growers, packers, processors, are all making a decent wage, and we’re getting American consumers food on their table that’s safe and healthy and a decent price.

And while you’re at it, please forward me the citations for where (and based on what expertise) DOJ is charged with ensuring decent wages, securing  safe and healthy food, and determining what is a “decent” price.