United States v. Suiza Foods Corp. and Broughton Foods Co.; Public Comments and Response

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Suiza Foods Corp. and Broughton Foods Co.;

Public Comments and Response

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. 16(b)-(h), that Public Comments and

Plaintiff's Response have been filed with the United States District

Court for the Eastern District of Kentucky, London Division, in United

States v. Suiza Foods Corporation and Broughton Foods Company, Dkt. No.

99-CV-130.

On March 18, 1999, the United States filed a civil antitrust

Complaint in the United States District Court for the Eastern District

of Kentucky, London Division, alleging that the proposed acquisition of

Broughton Foods Company (``Broughton'') by Suiza Foods Corporation

(``Suiza'') would violate section 7 of the Clayton Act, 15 U.S.C. 18.

The Complaint alleges that Suiza and Broughton compete to sell milk to

school districts, that in 55 school districts located in South Central

Kentucky the acquisition is likely to substantially lessen competition

in the sale of school milk, and that therefore school districts and

students would likely pay higher school milk prices or experience lower

school milk quality and service.

A proposed Final Judgment embodying the settlement of this case was

filed with the Court on April 28, 1999, along with a Competitive Impact

Statement describing the Complaint and proposed Final Judgment. The

Competitive Impact Statement and invitation for public comments were

published in the Federal Register on May 17, 1999. Such comments, and

the response thereto, are hereby published in the Federal Register and

filed with the Court.

Copies of the Complaint, Stipulation, proposed Final Judgment,

Competitive Impact Statement, Public Comments and Plaintiff's Response

also may be inspected in Room 3233 of the Antitrust Division,

Department of Justice, Tenth Street and Pennsylvania Avenue, NW.,

Washington, DC 20530 (telephone: 202/633-2481) and at the office of the

Clerk of the United States District Court for

[[Page 42716]]

the Eastern District of Kentucky, London Division, 300 South Main

Street, London, Kentucky 40741.

Copies of any of these materials may be obtained upon request and

payment of a copying fee.

Constance K. Robinson,

Director of Operations & Merger Enforcement.

United States District Court Eastern District of Kentucky, London

Division

[Civil Action No. 99-CV-130]

United States of America, Plaintiff, vs. Suiza Foods

Corporation, d/b/a Louis Trauth Dairy, Land O'Sun Dairy, and Flav-O-

Rich Dairy, and Broughton Foods Company,

d/b/a Southern Belle Dairy, Defendants.

Plaintiff's Response to Public Comments

Plaintiff, the United States of America, pursuant to the Antitrust

Procedures and Penalties Act (``Tunney Act''), 15 U.S.C. 16(b)-(h),

hereby files the Response to Public Comments relating to the proposed

Final Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

Plaintiff filed a civil antitrust Complaint on March 18, 1999, in

United States District Court for the Eastern District of Kentucky,

London Division, alleging that the proposed acquisition of Broughton

Foods Company (``Broughton'') by Suiza Foods Corporation (``Suiza'')

would violate section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint

alleges that Suiza and Broughton compete to sell milk to school

districts, that in 55 school districts located in South Central

Kentucky the acquisition is likely to substantially lessen competition

in the sale of school milk, and that therefore school districts and

students would likely pay higher school milk prices or experience lower

school milk quality and service.

The prayer for relief seeks: (a) An adjudication that the

transaction described in the Complaint would violate section 7 of the

Clayton Act; (b) preliminary and permanent injunctive relief preventing

the consummation of the transaction; (c) an award to the United States

of the costs of this action; and (d) such other relief as is proper.

After this suit was filed, a proposed settlement was reached that

permits Suiza to complete its acquisition of Broughton while preserving

competition in the sale of milk in South Central Kentucky school

districts where the transaction has raised competitive concerns. A

Stipulation and proposed Final Judgment embodying the settlement were

filed with the Court on April 28, 1999, along with a Competitive Impact

Statement describing the Complaint and proposed Final Judgment. The

Competitive Impact Statement and invitation for public comments were

published in the Federal Register on May 17, 1999.

If entered by the Court, the proposed Final Judgment would order

Suiza to divest the entire operations of one of Broughton's dairy

plants, Southern Belle Dairy, based in Pulsaki County, Kentucky, and

all its related assets. Southern Belle dairy is the one Broughton

entity that competes for the sale of milk in all of the school

districts alleged in the Complaint to be affected by the merger. Unless

the plaintiff grants a time extension, Suiza must divest Southern Belle

Dairy and related assets within six (6) months after the filing of the

proposed Final Judgment in this action or within five (5) business days

after notice of entry of the Final Judgment, whichever is later. If

Suiza does not divest Southern Belle Dairy and related assets within

that period, the Court, upon plaintiff's application, is to appoint a

trustee to sell it. The proposed Final Judgment also requires that,

until divestiture has been accomplished, Suiza and Broughton shall take

all steps necessary to maintain and operate Southern Belle Dairy as an

active competitor such that the sale and marketing of its products

shall be conducted separate from, and in competition with, all of

Suiza's products, shall maintain sufficient management and staffing,and

shall maintain Southern Belle Dairy in operable condition at current

capacity configurations.

The 60-day period to submit public comments expired on July 16,

1999. As of the date of the filing of this Response, the United States

had received only one public comment. This came from the Food Service

Director of Lincoln County Public Schools in Stanford, Kentucky.

Lincoln County is one of the 55 school districts alleged in the

Complaint to be impacted by the proposed acquisition.

II. Plaintiff's Response to Public Comments

The one public comment received in this matter is essentially an

expression of gratitude to the United States Department of Justice

staff for intervening in the proposed acquisition and for helping to

preserve Southern Belle Dairy as an independent competitor. The

Department staff appreciates this comment and has no other response.

The single comment reflects the consistent concerns about the

acquisition that the Department staff heard from many school food

services directors during its investigation. The plaintiff also notes

that the lack of any negative public comments indicates generally that

there is no sector of the public likely to be dissatisfied with the

proposed settlement.

The Court's responsibility under the Tunney Act is to determine

whether entry of the proposed Final Judgment is ``within the reaches of

the public interest.'' United States v. Western Elec. Co., 993 F.2d

1572 (D.C. Cir. 1993). After due consideration of the public comment

received, the plaintiff concludes that entry of the proposed Final

Judgment as written will provide an effective and appropriate remedy

for the antitrust violation alleged in the Complaint and is therefore

in the public interest. The plaintiff intends to move the Court to

enter the proposed Final Judgment after the public comments and this

Response have been published in the Federal Register, as required by

the Tunney Act, 15 U.S.C. 16(d).

Dated: July 29, 1999.

Respectfully submitted,

James K. Foster,

Litigation II Section, U.S. Department of Justice, 1401 H Street, NW,

Suite 4000, Washington, DC 20530, (202) 307-0001.

By Facsimile:

Lincoln County Board of Education, 305 Danville Ave., Stanford,

Kentucky 40104, USA.

To: U.S. Department of Justice--Antitrust

Attn: Craig Conrath

Dear Sir,

Thank you for your intervention in the proposed merger between

Flav-O-Rich and Southern Belle Dairy. We were concerned that we

would have only one choice and the prices would go out of sight.

We appreciate what you did for our food service program.

Sincerely,

Carolyn Spangler,

Food Service Director, April 29, 1999.

Certificate of Service

I, James K. Foster, hereby certify that, on July 29, 1999, I

caused the foregoing document to be served on defendants Suiza Foods

Corporation and Broughton Foods Company, by fasimile and first-class

mail, postage pre-paid, to:

Paul Denis, Esq., Swidler Berlin Shereff Friedman, LLP, 3000 K

Street, NW., Suite 300, Washington, DC 20007, facsimile: 202/424-

7645

William Kolasky, Esq., Wilmer, Cutler & Pickering, 2445 M Street,

NW., Washington, DC 20037, facsimile: 202/663-6363

James K. Foster,

[FR Doc. 99-20162 Filed 8-4-99; 8:45 am]

BILLING CODE 4410-11-M