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 performance of fluid milk channel during the period affected by the alleged anticompetitive conduct and the period of antitrust actions in eight cities located in the affected regions. The empirical analysis reveals differences in the behavior of retail fluid whole milk prices, farm milk prices (Class I milk prices) and farm-to-retail margins during the two analyzed periods. There is empirical evidence indicating that increases in farm milk prices (Class I milk prices) are much higher in magnitude than increases in retail fluid whole milk prices, and farm-to-retail margins are lower in the antitrust action period. Furthermore, the vertical price transmission process (cost pass-through) and retail fluid milk pricing practices are different in the two analyzed periods in seven out of eight cities.


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