Consumers as Private Attorneys General
One of the biggest problems with the modern U.S. economy is the concentration of wealth in the hands of a few. When wealth is highly concentrated, it becomes almost impossible for small, independent producers to compete in the marketplace. The Department of Justice does not always do their job when it comes to enforcing the antitrust laws that were designed to prevent unreasonable economic concentration. When Justice fails to act, it’s up to everyday consumers, or independent producers, retailers, or other types of businesses to act as their own private attorney generals to file suit against those who restrain trade and work to eliminate competition in the market.
Here is a case to follow where everyday consumers and small companies alike are challenging the restraints on trade that threaten our modern economy:
- Food Lion, et al v. Dean Foods Co, et al, U.S. 6th Circuit Court of Appeals, No. 12-5457d
In 2001, Dean Foods was the second largest milk producer in the United States. It merged later that year with Suiza Foods Corp., the largest U.S. milk processor at the time, and became Deans Foods. In an attempt to avoid antitrust prosecution from the U.S. Justice Department, it divested its assets to create a new “competitor”: National Dairy Holdings. Food Lion and Fidel Breto, two retailers of processed milk, brought a class action lawsuit alleging that Dean Foods and National Dairy Holdings entered into a conspiracy not to compete in states throughout the Southeastern part of the United States. Their argument rested on the claim that Dean Foods and National Dairy Holdings were linked by Dairy Farmers of America, a large marketing cooperative. Prior to the merger, Dean Foods obtained its milk from independent producers, while Suiza purchased it from Dairy Farmers of America. Subsequent to the merger, Dairy Farmers of America obtained a 50 percent stake in National Dairy Holdings and allegedly obtained guarantees from Dean Foods to supply milk to all its bottling plants.
A District Court originally dismissed the suit in 2012, holding that the plaintiffs had not shown that they were sufficiently injured by the arrangement between the three companies. The judge also ruled that the plaintiffs failed to establish the arrangement had produced an anti-competitive effect in the relevant geographic region.
The evidence apparently showed otherwise, however, as the average prices for bottled milk in the area increased by 7.9 percent between 2002 and 2007. The U.S. Court of Appeals for the 6th Circuit sent the case back to the District Court for further proceedings.
Based on the facts, it appears the plaintiffs have a good case for proving an unreasonable restraint on trade in violation of the Sherman Act. It is this type of action, with multiple aggrieved entities coming together, where these private attorneys general can perform a social good by placing a check in the private market on industries that attempt to divide markets, restrain trade, and attain monopolistic power.
This case is just one of many examples of situations where consumers can unite as a class and combat corporate concentrations of wealth that hurt competition, artificially inflate prices, and provide a select few with an unfair economic advantage. More consumers need to be aware of the antitrust swords they are more than capable of wielding. It is with this knowledge that unfair and unreasonable concentrations of economic power can be checked in favor of independent producers who serve as the engine for the local and national U.S. economy.
