An Analysis of Milk Pricing in the Eastern United States

In 2008 and 2009 dairy farmers in the U.S. Southeast and Northeast regions filed class action antitrust lawsuits, in which they alleged that Dean Foods, the largest fluid milk processor in the country, and Dairy Farmers of America, the largest dairy cooperative in the country, engaged in anticompetitive conduct, which restricted competition in the fluid milk market in these regions. This research analyzes the behavior of Class I milk prices in ten cities located in the Southeast and Northeast regions during the period of alleged anticompetitive conduct (the pre-antitrust action period) and the period of antitrust actions (the antitrust action period). There is empirical evidence indicating that the monthly average Class I price and the monthly average cooperative Class I price are higher in the antitrust action period, as compared to the pre-antitrust action period, in all analyzed cities. The monthly average premium measured in $ per cwt and the monthly average premium measured as a percentage of the cooperative Class I price increase in the antitrust action period, as compared to the pre-antitrust action period, in all analyzed cities located in the Southeast region and in one city representing the Northeast region.