Dairy Cooperatives Face a US Price-Fixing Antitrust Suit
A nationwide antitrust class action has been filed in the U.S. District Court for the Eastern District of Virginia against the National Milk Producers Federation and 14 major dairy marketing cooperatives. The complaint alleges that the defendants coordinated export subsidies through the Cooperatives Working Together programme, which now operates under the name NEXT Program, to reduce domestic availability and increase prices for consumers.
The proposed class includes indirect purchasers who bought products such as fluid milk, cheese, butter and yoghurt in dozens of states from January 2018 onwards. The plaintiffs are seeking compensatory damages, treble damages available under federal antitrust law and permanent injunctive relief under the Sherman Act and related state statutes. They also ask the court to dismantle the joint export-financing structure.
According to the complaint, member cooperatives paid regular assessments based on hundredweight volumes into a central fund. That money was used to support members’ commercial bids in foreign markets for milk-intensive products, including cheddar cheese, anhydrous milk fat and butter. The filing says that producing one pound of hard cheese requires about ten pounds of raw fluid milk.
Historical figures cited in the case state that the programme has helped export hundreds of millions of pounds of manufactured dairy products. The complaint equates those shipments with the diversion of tens of billions of pounds of raw-milk solids to overseas markets since the initiative began. It alleges that removing those volumes prevented domestic surpluses from putting downward pressure on wholesale prices.
The programme expanded export sales in Latin America, Asia and the Middle East. Cooperative leaders have said that selling surplus production abroad supports the domestic supply chain and helps stabilise farmers’ milk payments. The mechanism was established to increase farmgate milk prices by an estimated 30 to 50 cents per hundredweight, according to the report.
The lawsuit also challenges the scope of the Capper-Volstead Act of 1922, which provides antitrust protections for certain cooperative activities. The plaintiffs argue that arrangements in which cooperatives subsidise competitors’ export volumes fall outside those protections. Earlier litigation involving dairy herd-retirement programmes ended in class-action settlements worth more than $270m. The current case could require the defendants to alter their export-financing and international-sales arrangements if the court rules against them or certifies a nationwide consumer class.
