Michigan Milk Lawsuit Update

Michigan Milk Lawsuit

michigan milk lawsuit settlement amountNational Milk Producers Federations (Cooperatives Working Together), Dairy Farmers of America Inc., Land O’ Lakes Inc., Dairylea Cooperative Inc. and Agri-Mark Inc. are accused of conspiring to fix prices of certain dairy products. They have agreed to settle this lawsuit to avoid a trial but deny the allegations. The evidence provided allegedly reveals that CWT participated in antitrust conspiracy by slaughtering dairy cows in their herds prematurely in Apr. 1 2009. They allegedly did this to maintain high product prices.

Class Eligibility

You can only claim cash if you purchased dairy products including half and half, yoghurt, sour cream, milk, cottage cheese and cream cheese, at a grocery store or other retailer.  People that purchased these products directly from the producer cannot join the class. Another condition is that you must have purchased these products while you were a resident of California, Arizona, Missouri, Nebraska, New Hampshire, Massachusetts, Michigan, Kansas, Washington DC, Oregon, Vermont, West Virginia, Nevada, Tennessee or Vermont.

Estimated Amount and Settlement Pool

The estimated amount varies because there were more claims received than expected.  So claims are expected to be between $10 and $20 or even $6.79 depending on how many members file. The payments will be made by the members’ choice of electronic payment. This may include Amazon Balance, PayPal or even Google Wallet.  The settlement pool amount is $52 million and the lawsuit was settled in California.

What is Price Fixing?

According to the Federal Trade Commission, price fixing is an agreement made by competitors to lower or stabilize prices or competitive terms.  In simpler terms, it involves two entities coming together to sell a certain product at a set price. This agreement can be verbal, written or even inferred from conduct.  But this practice is illegal because antitrust laws require companies to establish prices and other terms on their own.

The reason for this is that when companies agree to fix prices the result is often higher prices. It is still illegal even if the competitors agree to lower prices for products or services.  This is why most price fixing agreements are often made in secret. You should know that there are other agreements between competitors that do not involve increasing or lowering prices but still constitute price fixing. These include agreements on:

  • Shipping or credit terms
  • Excluding competitors from a trade show because of that competitor’s low price
  • Percentage of functional discounts
  • Price differentials between grades of production
  • Uniform or standard trade-in allowances
  • A method of quoting prices

Competitors may also cause antitrust concerns if they make agreements that interfere with competitive bidding or try to control production.

Reason Why Price Fixing Is Illegal

The law of demand and supply allows for healthy competition between companies in the market place.  For example, if there is oversupply of a certain product some companies distributing the product will lower the price while others will not. Obviously the lower priced products will be cleared off the shelves faster than the higher priced products. When companies conspire to keep the price artificially high it disrupts the normal laws of demand and supply.