U.S. Supreme Court declines Dean Foods antitrust appeal

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday declined to hear Dean Foods Co'sDF.N appeal over claims the business conspired to restrict competition for bottled milk in the southeastern United States, forcing the company to face an antitrust suit over the matter.

The high court’s refusal to intervene means a January ruling by the Cincinnati-based U.S. 6th Circuit Court of Appeals that revived the claims against Dallas-based Dean Foods remains intact. The case will now return to lower courts for further proceedings.

The case stems from the 2001 merger between Suiza Foods Corp, then the largest U.S. milk processor, and Dean Foods, the second largest. As part of the agreement, the merged company, known as Dean Foods, divested assets to steer clear of antitrust concerns by the U.S. Justice Department. Those assets helped create a new competitor called National Dairy Holdings.

But a class action lawsuit, led by food store chain Food Lion and businessman Fidel Breto, alleged that Dean Foods and National Dairy Holdings entered into a conspiracy not to compete in states throughout the Southeast.

The plaintiffs alleged the two companies were linked by the Dairy Farmers of America (DFA), a large marketing cooperative. Before the merger, DFA was Suiza’s main provider while Dean obtained its milk from independent producers.

After the merger, DFA took a 50 percent stake in National Dairy Holdings. But according to the plaintiffs, DFA also obtained guarantees from Dean Foods to supply milk to all of its bottling plants including those supplied by independent producers before the merger.

U.S. District Judge J. Ronnie Greer of Greeneville, Tennessee, dismissed all five counts of the retailers’ complaint, but the appeals court said the case could proceed to trial. The retailers appealed one of the counts of violating the Sherman Antitrust Act to the 6th Circuit Court of Appeals.

Dean Foods previously paid $140 million to settle a separate antitrust case over raw milk in the Southeast brought by a group of dairy farmers.

The case is Dean Foods Co v. Food Lion, U.S. Supreme Court, No. 14-110.

Reporting by Lawrence Hurley; Editing by Will Dunham