Danone ordered to sell Stonyfield Farms to proceed with WhiteWave acquisition
This is in order for Danone to proceed with its $12.5 billion acquisition of The WhiteWave Foods Company Inc.
The department said that, without the divestiture, the proposed acquisition likely would reduce competition between the two leading participants and top brands in the markets for raw and fluid organic milk, potentially harming dairy farmers in the northeast and U.S. consumers of fluid organic milk.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction.
At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns.
“The proposed acquisition would have blunted competition between the top two purchasers of raw organic milk in the northeast and the producers of the three leading brands of organic milk in the United States,” said Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.
“Today’s proposed settlement will ensure competitive marketplaces for both farmers in the northeast that sell raw organic milk and consumers who purchase fluid organic milk in stores nationwide.”
According to the department’s complaint, as a result of Danone’s long-term strategic partnership and supply and licensing agreements with WhiteWave’s primary competitor, CROPP Cooperative (CROPP), the proposed acquisition would have provided incentives and opportunities for cooperative behavior between the two leading purchasers of raw organic milk in the northeast.
This cooperation likely would have resulted in farmers receiving less favorable contract terms for the purchase of their raw organic milk.
Similarly, the proposed acquisition would have aligned the interests of the producers of Stonyfield, Horizon and Organic Valley, the only three national fluid organic milk brands, and risked higher prices and fewer choices for U.S consumers.
Under the terms of the proposed settlement, Danone must divest its Stonyfield Farms business to an independent buyer approved by the United States.
The department said that the divestiture will sever Danone’s and CROPP’s strategic partnership thereby eliminating the entanglements between CROPP and the merged firm.
As a result, the divestiture will preserve competition for the purchase of raw organic milk from northeast dairy farmers and the sale of fluid organic milk to consumers. ■