Ten Senators Ask For Antitrust Investigation
Of The Hood-NDH Dairy Merger

(THURSDAY, Dec. 5) – Led by Senators Patrick Leahy and James Jeffords, a bipartisan group of 10 U.S. senators from the Northeast is asking the Justice Department’s Antitrust Division to “closely investigate the proposed merger between H.P. Hood Inc. and National Dairy Holdings.”

In a letter to R. Hewitt Pate, the acting assistant attorney general for the Antitrust Division, the senators warn that, “If approved, the merger would create the nation’s second-largest milk processing company.  More importantly, the merger would allow one company – Dairy Farmers of America (DFA) – to control more than 90 percent of the New England fluid milk supply, with exclusive supply agreements with both Dean Foods and Hood Milk.”

The Antitrust Division currently is reviewing the proposed merger but has not yet decided whether to launch an investigation.  The agency has 30 days to decide whether to approve the merger or request more information.

Joining Leahy (D-Vt.) and Jeffords (I-Vt.), who drafted the letter, the other Northeastern senators who signed the letter are Senators Olympia Snowe (R-Maine), Susan Collins (R-Maine), Jack Reed (D-R.I.), Lincoln Chafee (R-R.I.), Joseph Biden (D-Del.), Robert Torricelli (D-N.J.), Christopher Dodd (D-Conn.), and Arlen Specter (R-Pa.).  Congressman Bernie Sanders (I-Vt.) is circulating a similar letter for signatures in the House of Representatives.

H.P. Hood, a New England icon, is acquiring the much larger National Dairy Holdings from DFA and other investors.  DFA owns a controlling interest in National Dairy Holdings, which was created as a spin off of the Dean Foods/Suiza Foods merger just last year.  As a condition of the sale, DFA will have an exclusive right to supply milk to all H.P. Hood plants -- including those currently supplied by Agri-Mark.  DFA has similar exclusive-supply agreements with Dean Foods and other fluid milk processors.

If the merger is approved only two mid-sized bottlers in New England – the Oakhurst bottling plant in Maine and the Guida plant in Connecticut – and a handful of smaller plants will not have exclusive supply arrangements with DFA.

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Text of the letter:
 

December 3, 2002

R. Hewitt Pate

Acting Assistant Attorney General

Antitrust Division

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530

Dear Attorney General Pate:

We ask you to closely investigate the proposed merger between H.P. Hood Inc. and National Dairy Holdings, which was announced on November 12, 2002.  If approved, the merger would create the nation’s second-largest milk processing company.  More importantly, the merger would allow one company -- Dairy Farmers of America (DFA) -- to control more than 90 percent of the New England fluid milk supply, with exclusive supply agreements with both Dean Foods and Hood Milk.

H.P. Hood is acquiring the much larger National Dairy Holdings from DFA and other investors.  DFA owns a controlling interest in National Dairy Holdings, which was created as a spin off of the Dean Foods/Suiza Foods merger just last year.  As a condition of the sale, DFA will have an exclusive right to supply milk to all H.P. Hood plants -- including those currently supplied by other cooperatives such as Agri-Mark.  DFA has similar exclusive-supply agreements with Dean Foods and other fluid milk processors.  If the merger is approved only two mid-sized bottlers in New England – the Oakhurst bottling plant in Maine and the Guida plant in Connecticut – and a handful of smaller plants will not have exclusive supply arrangements with DFA.

Furthermore, we are concerned that the merger could force other dairy cooperatives in the region to drop out of the federal milk marketing order system.  To participate in the Northeast order, at least 20 percent of a cooperative’s milk must be shipped to fluid milk plants during the fall.  By controlling access to most major fluid milk plants in the region, DFA could prevent other cooperatives from qualifying to participate in the Northeast marketing order.  As a result, dairy farmers in New England ultimately could have no choice but to market their milk through DFA.

Farm cooperatives are designed to return profits to producers, but they are not immune from all antitrust laws.  The approval of this merger could cut out all independent farmers and other cooperatives in the Northeast from the marketing system.  We ask you to carefully scrutinize this deal for violations of antitrust law.

Sincerely,

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PATRICK LEAHY                                                            JAMES JEFFORDS   

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OLYMPIA SNOWE                                                         SUSAN COLLINS

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JACK REED                                                                     LINCOLN CHAFEE
                                     

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JOSEPH BIDEN                                                               ROBERT TORRICELLI

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CHRISTOPHER DODD