Dairy Farmers of America agrees $46m CME price fixing settlement
The lawsuit, which was filed at the US District Court of Vermont in February 2013, alleged that in 2004 DFA bought cheese on the CME Cheese Spot market despite having an “inordinate supply of cheddar cheese and no conceivable use for the cheese it was purchasing.”
The Cheese Spot market is not a major source of cheese in the US, representing less than 2% of the national supply. Price movements in the Cheese Spot market do, however, help to determine the broader value of dairy products sold in the US.
The lawsuit also alleged that DFA bought CME Milk Futures contracts to stimulate demand and encourage higher prices – knowing that these prices were used as a basis for national dairy product prices.
“No admission of guilt” despite settlement
Despite reaching an agreement with the claimants, DFA stated that it would be making “no admission of wrongdoing.”
“Dairy Farmers of America has reached a settlement agreement in a portion of the class action lawsuit regarding DFA’s trading activity on the Chicago Mercantile Exchange in 2004,” said DFA in a statement.
“Under the terms of the settlement with the class of direct purchasers of dairy products, filed this week, DFA makes no admission of wrong doing and will pay $46m to the plaintiff class.”
The lawsuit also cited DFA subsidiary’s Keller’s Creamery and National Dairy Holdings as co-defendants, and US dairy processor Schreiber Foods as a “co-conspirator.”
DairyReporter.com attempted to contact DFA to confirm whether the $46m settlement covered the alleged involvement of Keller’s Creamery and National Dairy Holdings, but was unable to speak with a company representative prior to publication.
Settlement removes “a source of distraction”
In January 2013, DFA agreed to pay $158.6m to settle a separate price fixing lawsuit.
The earlier lawsuit alleged that DFA, Dean Foods and others conspired to fix raw milk prices across 14 Southeast US states by closing bottling plants and stifling competition.
On this occasion, DFA also stated that it would be making “no admission of wrongdoing.”
Commenting on both lawsuits, DFA said that resolving these issues enabled the company to “remove a source of distraction.”
“Our farmer leadership and management team have worked diligently to put certain old issues behind us and resolve pending litigation. Recently we were able to settle a class action lawsuit in the Southeast United States. Resolution of both of these lawsuits allows us to remove a source of distraction for our leadership and to avoid additional legal fees,” said the DFA statement.
