64984 Federal Register / Vol. 71, No. 214 / Monday, November 6, 2006 / Notices 

containing information and arguments 

pertinent to the subject matter of the 

investigations. Parties may file written 

testimony in connection with their 

presentation at the conference no later 

than three days before the conference. If 

briefs or written testimony contain BPI, 

they must conform with the 

requirements of sections 201.6, 207.3, 

and 207.7 of the Commission’s rules. 

The Commission’s rules do not 

authorize filing of submissions with the 

Secretary by facsimile or electronic 

means, except to the extent permitted by 

section 201.8 of the Commission’s rules, 

as amended, 67 FR 68036 (November 8, 

2002). Even where electronic filing of a 

document is permitted, certain 

documents must also be filed in paper 

form, as specified in II (C) of the 

Commission’s Handbook on Electronic 

Filing Procedures, 67 FR 68168, 68173 

(November 8, 2002). 

In accordance with sections 201.16(c) 

and 207.3 of the rules, each document 

filed by a party to the investigations 

must be served on all other parties to 

the investigations (as identified by 

either the public or BPI service list), and 

a certificate of service must be timely 

filed. The Secretary will not accept a 

document for filing without a certificate 

of service. 

Authority: These investigations are being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.12 of the 

Commission’s rules. 

Issued: November 1, 2006. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E6–18654 Filed 11–3–06; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of Consent Decree 

Under the Comprehensive 

Environmental Response, 

Compensation, and Liability Act and 

the Delaware Hazardous Substances 

Cleanup Act 

Notice is hereby given that on 

September 29, 2006, a proposed Consent 

Decree in United States and the State of 

Delaware v. E.I. Dupont De Nemours & 

Company, Inc., and CIBA Specialty 

Chemicals Corporation, Civil Action No. 

06–612 was lodged with the United 

States District Court for the District of 

Delaware. 

In this action the United States and 

the State of Delaware sought claims for 

natural resource damages brought 

pursuant to the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

(‘‘CERCLA’’), as amended, 42 U.S.C. 

9601 et seq. and the Delaware 

Hazardous Substance Cleanup Act 

(‘‘HSCA’’), 7 Del. C. Chapter 91 with 

respect to the release of hazardous 

substances from DuPont-Newport 

chemical facility, located in Newport, 

Delaware. Under the proposed Consent 

Decree, the defendants will fund 

restoration projects on the ‘‘Pike 

Property’’ as set forth in the Damage 

Assessment and Restoration Plan 

(‘‘DARP’’, attached to the Consent 

Decree), and the State of Delaware will 

hold an environmental covenant for the 

Pike Property to protect it in perpetuity. 

Defendants will reimburse each Trustee 

for its Damage Assessment Costs, and 

make a payment to Delaware for 

groundwater injuries. The total value of 

the settlement as set forth in the 

Consent Decree is $1.6 million. 

The Department of Justice will receive 

for a period of fifteen (15) days from the 

date of this publication comments 

relating to the Consent Decree. 

Comments should be addressed to the 

Assistant Attorney General, 

Environment and Natural Resources 

Division, P.O. Box 7611, U.S. 

Department of Justice, Washington, D.C. 

20044–7611, and should refer to United 

States and the State of Delaware v. E.I. 

Du Pont De Nemours & Company, Inc., 

and CIBA Specialty Chemicals 

Corporation, D.J. Ref. 90–11–2–883/2. 

The Consent Decree may be examined 

at the Office of the United States 

Attorney, for the District of Delaware, 

1007 Orange Street, Suite 700, 

Wilmington, Delaware. During the 

public comment period, the Consent 

Decree, may also be examined on the 

following Department of Justice Web 

site, http://www.usdoj.gov/enrd/ 

Consent_Decrees.html. A copy of the 

Consent Decree may also be obtained by 

mail from the Consent Decree Library, 

P.O. Box 7611, U.S. Department of 

Justice, Washington, DC 20044–7611 or 

by faxing or e-mailing a request to Tonia 

Fleetwood (tonia.fleetwood@usdoj.gov), 

fax no. (202) 514–0097, phone 

confirmation number (202) 514–1547. In 

requesting a copy from the Consent 

Decree Library, please enclose a check 

in the amount of $6.00 (25 cents per 

page reproduction cost) payable to the 

U.S. Treasury. 

A copy of the Consent Decree may 

also be obtained at the offices of the 

Delaware Department of Natural 

Resources and Environmental Control, 

Division of Air and Waste Management, 

Site Investigation and Restoration 

Branch, 391 Lukens Drive, New Castle, 

Delaware 19720, Main phone number: 

302–395–2600, Site Name: DuPont 

Newport NRDA DE–X009. Contacts: 

Jane Biggs Sanger, Elizabeth LaSorte, or 

Robert Newsome. An electronic version 

of the Consent Decree and the DARP can 

be viewed at http:// 

apps.dnrec.state.de.us/intraviewer/ 

session/frmmain.cfm. 

Robert Brook, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 06–9104 Filed 11–3–06; 8:45 am] 

BILLING CODE 4410–15–M 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. Dairy Farmers of 

America, Inc.; Proposed Final 

Judgement and Competitive Impact 

Statement 

Notice is hereby given pursuant to the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b) through (h), that a 

proposed Final Judgement, Stipulation, 

and Competitive Impact Statement have 

been filed with the United States 

District Court for the Eastern District of 

Kentucky in United States of America 

and Commonwealth of Kentucky v. 

Dairy Farmers of America, Inc. and 

Southern Belle Dairy Co., LLC, No. 6:03–

cv–206. On April 24, 2003, the United 

States and Commonwealth of Kentucky 

filed a Complaint alleging that the 

acquisition by DFA of an ownership 

interest in Southern Belle Dairy Co., 

LLC (‘‘Southern Belle’’), violated 

Section 7 of the Clayton Act, 15 U.S.C. 

18. An Amended Complaint was filed 

on May 6, 2004. The proposed Final 

Judgment, filed on October 2, 2006, 

requires DFA to divest its interest in 

Southern Belle and use its best efforts to 

cause its partner, the Allen Family 

Limited Partnership, to divest its 

interest in Southern Belle as well. 

Copies of the Amended Complaint, 

proposed Final Judgment, and 

Competitive Impact Statement are 

available for inspection at the 

Department of Justice in Washington, 

DC in Room 215, 325 Seventh Street, 

NW., and at the Office of the Clerk of 

the United States District Court for the 

Eastern District of Kentucky, London, 

Kentucky. 

Public comment is invited within 60 

days of the date of this notice. Such 

comments, and responses thereto, will 

be published in the Federal Register 

and filed with the Court. Comments 

should be directed to Mark J. Botti, 

Chief, Litigation I Section, Antitrust 

Division, U.S. Department of Justice, 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 71, No. 214 / Monday, November 6, 2006 / Notices 64985 

1401 H St., NW., Suite 4000, 

Washington, DC 20530 (202–307–0001). 

J. Robert Kramer II, 

Director of Operations, Antitrust Division. 

United States District Court, Eastern 

District of Kentucky, London Division 

United States of America, and 

Commonwealth of Kentucky, Plaintiffs, 

v. Dairy Farmers of America, Inc., and 

Southern Belle Dairy Co., LLC, 

Defendants 

Civil Action No.: 03–206–KSF 

Filed: 

Amended Complaint 

The United States of America, acting 

under the direction of the Attorney 

General of the United States, and the 

Commonwealth of Kentucky, by and 

through its Attorney General, bring this 

civil action to obtain equitable relief 

against defendants, including 

compelling the Dairy Farmers of 

America, Inc. (‘‘DFA’’) to divest its 

interest in the Southern Belle dairy 

located in Somerset, Kentucky, and 

allege as follows: 

I. Nature of the Action 

1. Up until February 2002, DFA, 

through its subsidiaries, operated the 

Flav-O-Rich dairy in London, Kentucky 

(‘‘Flav-O-Rich’’) and competed 

vigorously against the Southern Belle 

dairy, located thirty miles away in 

Somerset, Kentucky (‘‘Southern Bell’’), 

to supply milk to school districts 

located in Kentucky and Tennessee. 

That competition resulted in lower 

prices and better service for school 

districts that provide milk to students. 

2. In February 2002, DFA, through 

another subsidiary, acquired control of 

Southern Belle, eliminating that 

important competition. When it made 

that acquisition, DFA understood that 

the Department of Justice had in 

September 1998 successfully challenged 

a merger involving the very same 

dairies, under different ownership, 

because it would have substantially 

lessened competition in violation of 

Section 7 of the Clayton Act. 

3. Southern Belle and Flav-O-Rich are 

the only two dairies or two of only a few 

dairies that bid to supply school milk in 

many parts of Kentucky and Tennessee. 

In 45 school districts, the acquisition 

has created a monopoly. In 55 other 

districts, the number of bidders has 

effectively declined from three to two, 

reducing competition substantially. 

4. History in this region has 

demonstrated that less competition 

results in higher prices. Many school 

districts in this area previously had to 

pay higher prices as victims of a 

criminal bid-rigging conspiracy 

involving school milk. The former 

owners of Southern Belle and Flav-ORich engaged in that conspiracy and 

pled guilty to conspiring with each 

other for more than a decade to rig 

school milk bids. 

5. Because many of the affected 

school districts are small or rural 

districts, often in the mountains, it is 

unlikely that other dairies will enter or 

expand into these markets to eliminate 

the anticompetitive effects of the 

acquisition. Indeed, Southern Belle’s 

former owner, in the course of 

debarment proceedings following the 

criminal conviction, explained that 

entry was unlikely in many of these 

very districts, and that the elimination 

of Southern Belle as a competitor would 

reduce competition and cause prices to 

rise. 

II. Defendants 

6. Defendant Dairy Farmers of 

America, Inc. (‘‘DFA’’) is a Kansas 

corporation with its headquarters and 

principal place of business in Kansas 

City, Missouri. DFA is the largest dairy 

farmer cooperative in the world. In 

2001, it had approximately 25,500 

members in 48 states, and sold 

approximately 45.6 billion pounds of 

raw milk. DFA had over $7.9 billion in 

revenues in 2001. 

7. DFA owns a 50% common equity 

interest and approximately 92% 

preferred equity interest (around 

$500,000,000) in National Dairy 

Holdings, L.P. (‘‘NDH’’). It also has a 

50% interest in Dairy Management LLC, 

which is the managing arm of NDH. 

Based on its financial interests in NDH, 

DFA has the rights to between 50% and 

75% or more of NDH’s profits. In 

forming NDH, DFA and its partners in 

NDH agreed, among other that DFA 

must approve any decision to commit 

NDH to any contracts or expenditures 

exceeding $50,000, to appoint new NDH 

officers, or change the compensation 

(e.g., increase the salary) of NDH’s 

officers. 

8. DFA is the sole supplier of raw 

milk and is the contractually preferred 

supplier of raw milk to Flav-O-Rich and 

other NDH dairies. DFA also sells more 

raw, unprocessed milk to dairies in 

Kentucky and Tennessee than does any 

other entity. 

9. In addition to its controlling 

interests in Flav-O-Rich, DFA also owns 

financial interests in several other 

dairies that sell school milk in parts of 

Kentucky and Tennessee, including five 

additional NDH dairies, three Turner 

Holdings dairies, and one Ideal 

American dairy. Until February 2002, 

when the instant acquisition was 

consummated, Southern Belle competed 

with a number of these dairies in 

addition to NDH dairies such as Flav-ORich. 

10. In December 2001, DFA, through 

NDH, acquired control and influence 

over all significant business decisions of 

Flav-O-Rich and other NDH dairies. 

Flav-O-Rich processes approximately 30 

million gallons of fluid milk per year 

and had annual revenues of 

approximately $70 million in 2001. 

Flav-O-Rich distributes and sells school 

milk primarily in the eastern two-thirds 

of Kentucky and Tennessee. 

11. In February 2002, DFA, through 

its partially owned subsidiary, Southern 

Belle Dairy Co., LLC, (‘‘Southern Bell 

subsidiary’’), acquired control and 

influence over all significant business 

decisions of Southern Belle. DFA and 

subsidiaries controlled in who or in part 

by DFA contributed approximately $18 

million of the $19 million purchase 

price for Southern Belle. The Allen 

Family Limited Partnership (‘‘AFLP’’) 

contributed the remaining $1 million, 

which DFA guaranteed AFLP could 

recover any time after February 26, 

2005. DFA and its subsidiaries own a 

50% common equity interest and almost 

100% preferred equity interest (around 

$4,000,000), and 100% credit interest 

(around $13,000,000) in Southern Belle. 

12. DFA formed its Southern Belle 

subsidiary to acquire the Southern Belle 

dairy after it became clear that its NDH 

subsidiary could not acquire the dairy 

based on the Department of Justice’s 

September 1998 challenge. 

13. In planning how DFA would 

control the Southern Belle subsidiary 

after they formed it, DFA and AFLP 

agreed, among other things, that DFA 

must approve any decision to commit 

Southern Belle to any contracts or 

expenditures exceeding $150,000, as 

well as hiring and compensation 

decisions for Southern Belle’s officers. 

DFA also gained the right to control the 

supply of raw milk to the dairy and, 

based on its debt and equity holdings, 

the rights to between 50% and 75% of 

the dairy’s profits. 

14. Defendant Southern Belle Dairy 

Co., LLC, is a Delaware limited liability 

company with its headquarters and 

principal place of business in Somerset, 

Kentucky, where it owns and operates 

the Southern Belle dairy. Southern Belle 

processes approximately 25 million 

gallons of fluid milk per year and had 

annual revenues of approximately $65 

million in 2001. Southern Belle 

distributes and sells school milk 

primarily in the eastern two-thirds of 

Kentucky and Tennessee. 


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III. Jurisdiction and Venue 

15. This Complaint is filed under 

Section 15 of the Clayton Act, as 

amended, 15 U.S.C. 25, and by the 

Commonwealth of Kentucky under 15 

U.S.C. 26, to prevent and restrain 

defendants from continuing to violate 

Section 7 of the Clayton Act, as 

amended, 15 U.S.C. 18, and under the 

provisions of K.R.S. § 367.110 et seq. 

16. Defendants, on their own or 

through their subsidiaries, transport and 

sell school and other milk in the flow 

of interstate commerce in Kentucky and 

Tennessee and are engaged in interstate 

commerce and in activities substantially 

affecting interstate commerce. 

Defendant DFA also buys and sells raw 

milk in interstate commerce. This Court 

has jurisdiction over the subject matter 

of this action and the parties pursuant 

to Section 12 of the Clayton Act, 15 

U.S.C. 22, and 28 U.S.C. 1331, 1337(a) 

and 1345. 

17. Both of the defendants transact 

business and are found in the Eastern 

District of Kentucky. Defendant 

Southern Belle’s principal place of 

business is in this district. Venue is 

proper in this judicial district pursuant 

to 15 U.S.C. 22 and 28 U.S.C. 1391. 

IV. History of Collusion on School Milk 

Sales in the Relevant Markets 

18. In late 1993, Southern Belle and 

Flav-O-Rich pled guilty to the felony of 

conspiring to raise the price of school 

milk by agreeing on which dairy would 

submit the lowest bid for which school 

district. The conspiracy existed from at 

least the late 1970s through July 1989, 

and resulted in substantial harm to over 

thirty school districts. Southern Belle 

paid a $375,000 criminal fine; Flav-ORich paid $1,000,000. No others were 

charged with participating in this 

conspiracy. The current acquisition 

recreates the effect of this conspiracy in 

many of those same school districts 

harmed by the conspiracy for over a 

decade. See United States v. Southern 

Belle Dairy Co., [1998–1996 Transfer 

Binder] Trade Reg. Rep. (CCH) ¶ 45,092, 

at 44,599 (E.D. Ky. Nov. 13, 19920; 

United States v. Flav-O-Rich, Inc., 

[1998–1996 Transfer Binder] Trade Reg. 

Rep. (CCH) ¶ 45,092, at 44,605 (N.D. Ga. 

Dec. 22, 1992). 

V. The Manufacture, Distribution, and 

Sale of School Milk Is a Relevant 

Product Market 

19. Dairies purchase raw milk from 

dairy farmers and agricultural 

cooperatives, pasteurize and package 

the milk, and distribute and sell the 

processed product. Fluid milk (‘‘fluid 

milk’’P is raw milk that has been 

processed for human consumption, may 

be unflavored or flavored with chocolate 

or fruit flavorings, and does not include 

extended shelf life (ESL) milk or ultra 

high temperature (UHT) milk, which are 

produced by different manufacturing 

processes, generally cost significantly 

more than fluid milk, and have 

numerous significant physical 

differences compared with fluid milk, 

such as shelf stability, and a 

significantly different taste, among other 

attributes. 

20. School milk is fluid milk that is 

processed, distributed, and sold to 

school districts, usually in half pint 

containers, pursuant to contracts with 

school districts. While these contracts 

may also include other products, school 

milk accounts for the vast majority of 

the dollar value of these contracts. 

21. The U.S. Department of 

Agriculture (‘‘USDA’’) sponsors several 

programs to reimburse schools for meals 

and snacks served to students from 

lower income families. To qualify, 

schools must offer mild to every 

student, regardless of the income of that 

student’s family. If schools want to 

receive the federal reimbursements, they 

cannot substitute other products for 

school milk, regardless of the milk’s 

cost. 

22. Individual school districts 

generally solicit bids from dairies to 

supply them with school milk. 

Sometimes, groups of school districts 

solicit bids to supply school milk to 

some or all of the school districts in the 

group, but each individual school 

district usually chooses (even if it 

solicited bids as part of a group) the 

dairy to which it will award its 

business. 

23. Schools require many important 

services in connection with the supply 

of school milk. These services often 

include frequent delivery (usually every 

day or every other day because schools 

generally cannot store more than a 

limited amount of milk); delivery to all 

or almost all schools in a district; 

reordering of milk; stocking milk in the 

coolers; rotating products; retrieving 

spoiled and damaged products; 

providing quick emergency shipments 

(to guarantee a school has enough milk 

on hand so it will not lose school meal 

reimbursements); the return of milk 

before holidays; specific times of 

delivery (e.g., early morning so as not to 

conflict with times when students are 

present); specific access requirements 

(e.g., providing keys to drivers); allotting 

credit for retrieved products; cleaning 

and maintaining coolers; and other 

requirements. 

24. School districts would not switch 

to alternative products or delivery 

methods in the event of a small but 

significant increase in the price of 

school milk. 

25. The manufacture, distribution, 

and sale of school milk constitutes a 

relevant product market or line of 

commerce within the meaning of 

Section 7 of the Clayton Act. 

VI. The Relevant Geographic Markets 

26. Individual school districts 

generally solicit bids for school milk, 

although sometimes groups of school 

districts solicit bids for school milk for 

some or all of the school districts in the 

group. School districts usually decide 

which dairy to award with a school milk 

contract on an individual basis 

(regardless of whether they solicit bids 

individually or as part of a group). 

Several school districts belong to a 

group of school districts that (1) requires 

its members to solicit bids for school 

milk only through that group, and (2) 

requires bidders to submit a uniform bid 

for all of the districts in the group. Each 

school district typically requires its 

school milk supplies to deliver to each 

school within the school district. School 

districts vary with respect to how many 

schools must be served, the distance 

between the schools, the size of the 

schools in the school district, and other 

attributes. Each school district has its 

own requirements with respect to the 

frequency of deliveries (typically every 

day or every other day, because schools 

generally cannot store more than a 

limited amount of milk), the time of 

deliveries, the quantity of deliveries, 

products included, cooler requirements, 

and specific or individual service 

requirements. 

27. Due to the high level of service 

requirements of schools, the high 

frequency of delivery required, the 

small volume delivered at each stop, the 

seasonal nature of the business, and 

other factors, the viable suppliers of 

school milk are generally limited to 

those dairies that already have 

significant local distribution in the area. 

Dairies that do not currently have 

nearby routes are generally not viable 

suppliers of school milk to such school 

districts. These factors limit school 

districts’ choice of suppliers. 

28. Dairies charge different prices to 

different school districts or groups of 

school districts (‘‘price discriminate’’), 

based on, among other things, the 

number of competing dairies in the area, 

the strength of competition in these 

localized school milk markets, and the 

unique service and other requirements 

of schools. 

29. Accordingly, each school district, 

or group of school districts that requires 

its members to use the school milk 


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Federal Register / Vol. 71, No. 214 / Monday, November 6, 2006 / Notices 64987 

supplier who submits a winning bid 

that is uniform for that entire group, 

constitutes a relevant geographic market 

or section of the country within the 

meaning of Section 7 of the Clayton Act. 

School districts harmed by the 

acquisition include those, among others, 

listed in Attachment A (‘‘Merger-toMonopoly Markets’’) and Attachment B 

(‘‘Merger-to-Duopoly Markets’’). 

VII. Harm to Consumers 

30. Competition between Southern 

Belle and Flav-O-Rich (or other dairies 

in which DFA has financial interests) 

resulted in lower prices and better 

service for many school milk customers 

in Kentucky and Tennessee. Southern 

Belle’s competitive presence forced 

these other dairies to lower their 

respective bid prices for school milk 

contracts. 

31. Before DFA’s acquisition of 

Southern Belle, school milk markets in 

Kentucky and Tennessee had very few 

competitors and thus were already 

highly concentrated. These markets 

have become much more concentrated 

as a result of the acquisition. 

32. In many of these markets, 

Southern Belle and Flav-O-Rich (or 

other dairies in which DFA has 

financial interests) are clearly the two 

dairies able to supply school milk most 

economically, and would benefit (at the 

expense of consumers) by acting 

together at DFA’s direction to raise one 

or both of their bids. Because it shares 

each dairy’s profits, DFA has a financial 

incentive to encourage, facilitate, or 

enforce such cooperation. And, with 

DFA’s control or influence over critical 

business decisions of the dairies, the 

dairies are likely to cooperate. Reducing 

the number of independent bidders 

from two to one in these markets makes 

it very likely that prices will rise or the 

level of service will decrease for these 

districts. 

33. In a number of other school 

districts, Southern Belle and Flav-ORich (or other dairies in which DFA has 

financial interests) are two of only three 

likely bidders. Reducing the number of 

independent bidders from three to two 

in these markets makes it very likely 

that prices will rise or the level of 

service will decrease for these districts. 

34. The effect of DFA’s acquisition of 

control and influence over Southern 

Belle is to substantially lessen 

competition, or to tend to create a 

monopoly in violation of Section 7 of 

the Clayton Act. 

VIII. Entry Is Difficult 

35. To maintain its ability to sell 

school milk, the former owner of 

Southern Belle told the USDA during 

debarment proceedings in 1998 that 

competition would decrease and prices 

would rise if it could not bid. It said that 

Southern Belle was an ‘‘important 

supplier to very small school districts in 

Kentucky and Tennessee,’’ especially in 

the ‘‘rural districts in the mountains of 

eastern Kentucky.’’ (Letter from Joseph 

L. Ruby, Wiley Rein & Fielding, to 

Yvette Jackson, Acting Administrator, 

Food and Consumer Service, USDA, Jan. 

23, 1998, at 2, copy provided in 

Attachment C.) It also said that those 

school districts would be unlikely to 

find any new school milk entrants to 

replace the lost competition if it could 

not bid. 

36. Entry by new competitors or 

expansion by existing dairies in the 

manufacture, distribution, and sale of 

school milk will not be timely, likely, or 

sufficient to defeat any increase in 

prices or decrease in the level of service 

in the affected school milk markets. A 

dairy is unlikely to enter a school milk 

market, even after a small but significant 

price increase, unless it already services 

a substantial number of existing 

commercial fluid milk customers from 

its route trucks in the school district. 

This is true because school milk 

business is usually used to ‘‘fill out’’ a 

dairy’s existing commercial fluid milk 

route truck business, as schools require 

the regular (e.g., every day or every 

other day) delivery of school milk along 

with a number of important laborintensive and time-consuming services, 

which would not be economical but for 

the existing fluid milk customer 

accounts. Thus, only dairies with 

existing straight truck delivery routes in 

an area can compete efficiently for 

school milk business in that area. Entry 

or expansion into the school milk 

business also requires substantial 

investment in specialized 

manufacturing assets and infrastructure, 

including the high cost of installing a 

dedicated half pint filler. 

37. Neither entry nor expansion 

prevented Southern Belle and Flav-ORich from successfully carrying a 

decade-long criminal bid rigging 

conspiracy against many of these same 

school milk districts. Such long-lasting 

collusion would not have been possible 

if higher prices easily attracted new 

competitors. 

IX. Violations Alleged 

38. DFA’s acquisition of Southern 

Belle through its partially owner 

Southern Belle subsidiary will likely 

have the following effects, among 

others: 

a. Competition generally in the 

manufacture, distribution, and sale of 

school milk in the relevant geographic 

markets will be substantially lessened; 

b. Actual and potential competition 

between Southern Belle and Flav-ORich (or other dairies in which DFA has 

financial interests) in the manufacture, 

distribution, and sale of school milk in 

the relevant geographic markets will be 

substantially lessened; and 

c. Prices for school milk in the 

relevant geographic markets will likely 

increase. 

39. DFA’s partial acquisition of 

Southern Belle violates Section 7 of the 

Clayton Act, as amended, 15 U.S.C. 18, 

and K.R.S. § 367.110 et seq. 

X. Relief Requested 

40. Plaintiffs request that this Court: 

a. Adjudge the acquisition of 

Southern Belle by defendant DFA to 

violate Section 7 of the Clayton Act, as 

amended, 15 U.S.C. 18, and K.R.S. 

§ 367.110 et seq. 

b. Compel DFA to divest all of its 

interests (including common equity, 

preferred equity, credit interests, raw 

milk procurement authority, etc.) in 

Southern Belle, and take any further 

actions needed to place Southern Belle 

in the same or comparable competitive 

position as existed prior to the 

acquisition; 

c. Permanently enjoin and restrain 

DFA, including any of its subsidiaries or 

joint ventures, and all persons acting on 

behalf of any of these entities, from 

acquiring or maintaining, in whole or 

part, any simultaneous legal or 

beneficial interests (including common 

equity, preferred equity, credit interests, 

or raw milk procurement authority) in 

both Southern Belle and Flaw-O-Rich; 

d. Compel DFA, including any of its 

subsidiaries or joint ventures, and all 

persons acting on behalf of any of these 

entities, to provide plaintiff United 

States of America with notification at 

least 30 calendar days prior to any 

acquisition, in whole or in part, of any 

legal or beneficial interests (including 

common equity, preferred equity, credit 

interests, or raw milk procurement 

authority) in any fluid milk processing 

operation; 

e. Allow any school district or school 

purchasing cooperative to terminate or 

rescind any contract to supply school 

milk entered into with defendants on or 

after February 20, 2002, including but 

not limited to eliminating any 

restrictions on or disincentives to 

terminating or rescinding such contracts 

and otherwise refunding or returning 

consideration paid in advance pursuant 

to such contracts (i.e., making such 

contracts voidable in the sole discretion 

of the school districts or purchasing 

cooperatives); 


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f. Award plaintiffs the costs of this 

action; and 

g. Award plaintiffs such other and 

further relief as is proper. 

Respectfully submitted, 

For Plaintiff United States of America: 

R. Hewitt Pate, 

Assistant Attorney General. 

J. Bruce McDonald, 

Deputy Assistant Attorney General. 

Mark J. Botti, 

Chief, Litigation I Section. 

Dated: March 30, 2004. 

For Plaintiff Commonwealth of Kentucky: 

David R. Vandeventer, 

Assistant Attorney General, Kentucky Bar No. 

72790, Office of the Attorney General of 

Kentucky, 1024 Capital Center Drive, 

Frankfort, KY 40601, 502–696–5385. 

Dated: March 30, 2004. 

John R. Read, 

Assistant Chief, Litigation I Section. 

J.D. Donaldson, Jody A. Boudreault, N. 

Christopher Hardee, Richard S. Martin, 

Richard D. Cooke, Ihan Kim, 

U.S. Department of Justice, Antitrust 

Division, 1401 H Street, NW., Suite 4000, 

Washington, DC 20530, 202–307–0001. 

ATTACHMENT A—Merger-to-Monopoly 

Markets 

Adair County, KY 

Ashland Independent, KY 

Bell County, KY 

Berea Independent, KY 

Boyd County, KY 

Boyle County, KY 

Breathitt County, KY 

Campbellsville Independent, KY 

Casey County, KY 

Clay County, KY 

Clinton County, KY 

Cumberland County, KY 

East Bernstadt Independent, KY 

Estill County, KY 

Fairview Independent, KY 

Garrard County, KY 

Harlan Independent, KY 

Harrodsburg Independent, KY 

Hazard Independent, KY 

Jackson County, KY 

Jenkins Independent, KY 

Jessamine County, KY 

Laurel County, KY 

Lee County, KY 

Leslie County, KY 

Letcher County, KY 

Lincoln County, KY 

Madison County, KY 

McCreary County, KY 

Mercer County, KY 

Montgomery County, KY 

Oneida Baptist, KY 

Owsley County, KY 

Perry County, KY 

Pineville Independent, KY 

Pulaski County, KY 

Rockcastle County, KY 

Russell County, KY 

Science Hill Independent, KY 

Somerset Independent, KY 

Wayne County, KY 

Whitley County, KY 

Williamsburg Independent, KY 

Wolfe County, KY 

Clay County, TN 

ATTACHMENT B—Merger-to-Duopoly 

Markets 

Allen County, KY 

Barbourville Independent, KY 

Barren County, KY 

Bath County, KY 

Butler County, KY 

Carter County, KY 

Caverna Independent, KY 

Corbin Independent, KY 

Fayette County (Lexington), KY 

Franklin County, KY 

Glasgow Independent, KY 

Green County, KY 

Greenup County, KY 

Hart County, KY 

Knox County, KY 

Larue County, KY 

Lawrence County, KY 

Logan County, KY 

Menifee County, KY 

Metcalfe County, KY 

Middlesboro Independent, KY 

Monticello Independent, KY 

Morgan County, KY 

Ohio County, KY 

Owensboro Independent, KY 

Rowan County, KY 

Russell Independent, KY 

Russellville Independent, KY 

Simpson County, KY 

Taylor County, KY 

Alcoa City, TN 

Anderson County, TN 

Blount County, TN 

Bristol City, TN 

Campbell County, TN 

Carter County, TN 

Clinton City, TN 

Cocke County, TN 

Elizabethon Independent, TN 

Green County, TN 

Greenville City, TN 

Hawkins County, TN 

Hamblen County, TN 

Johnson City, TN 

Johnson County, TN 

Knox County, TN 

Macon County, TN 

Maryville City, TN 

Metro Davidson (Nashville), TN 

Rogersville City, TN 

Sevier County, TN 

Sullivan County, TN 

Unicoi County, TN 

Union County, TN 

Washington County, TN 

ATTACHMENT C 

WILEY, REIN & FIELDING 

January 23, 1998 

By Messenger 

Ms. Yvette Jackson, 

Acting Administrator, Food and Consumer 

Service, U.S. Department of Agriculture, 

3101 Park Center Drive, Room 1008, 

Alexandria, VA 22302. 

Re: Southern Belle Dairy Company, Notice of 

Suspension and Debarment 

Dear Ms. Jackson: On behalf of the 

Southern Belle Dairy division of Broughton 

Foods, Inc. (‘‘Southern Belle’’), we would 

like to supplement the administrative record 

made at the meeting of January 15, 1998, in 

connection with certain issues raised at the 

hearing, and also to propose certain actions 

to assure that a repeat of the alleged reporting 

violations will not occur in the future. 

Southern Belle desires to supplement the 

record with the following documentation, 

which is attached: 

The Termination of Mr. Christian 

At our meeting, Mr. Hallberg expressed 

interest in reviewing documentation relating 

to Mr. Christian’s probation as of May 1997, 

leading to his termination for performance 

reasons. The following documentation is 

enclosed: 

Exh. 1. A May 15, 1997 ‘‘agenda’’ for a 

meeting with Mr. Christian. 

Exh. 2. A May 15, 1997 memo by Mr. 

Christian’s superior, Mike Chandler, 

summarizing a meeting with Mr. Christian at 

which he was informed of his need to 

improve performance or face termination, 

with a review to take place in two months. 

Southern Belle’s Contracts Under $100,000 

At our meeting, Ms. Landos sought 

information concerning the number of school 

milk contracts under $100,000 that were 

serviced by Southern Belle. Attached hereto 

as Exh. 3 are two lists, showing actual 1996–

97 and projected 1997–98 sales by school 

districts. 

The lists show that, for 1996–97, Southern 

Belle serviced 46 districts. Of those, 33 

districts had sales under $100,000. Of the 33 

districts, 16 had sales under $50,000. 

Projected sales for 1997–98 show that 

Southern Belle is currently servicing 55 

districts. Of these, 39 districts are projected 

to have sales under $100,000. Of the 39 

districts, 20 are projected to have sales under 

$50,000. 

These figures reveal that Southern Belle is 

an important supplier to very small school 

districts in Kentucky and Tennessee. As the 

maps we provided show, many of these are 

rural districts in the mountains of eastern 

Kentucky. These districts would likely find 

it difficult to attract alternative suppliers 

from more distant locations. 

It is of equal interest that for two years in 

a row, Southern Belle has been the low 

bidder in the Fayatte County district (that is, 

Lexington, Ky.), which has sales of over 

$600,000, and attracts multiple bids from 

competing dairies. 

As mentioned above, in addition to 

supplementing the record with this 

additional documentation, Southern Belle 

would like to suggest that it undertake 

certain changes in its current procedures, 

which it hopes will prevent the recurrence of 

any reporting difficulties in the future. 

As a preface to doing so, we note that 

Southern Belle, having been on the verge of 

bankruptcy and liquidation, is now a strong 

competitor and often the low bidder for 

school milk and other government contracts. 

Southern Belle has been able to continue in 

business and to attract a merger partner in 

Broughton Foods, whose purchase of 

Southern Belle means the continuing 

presence of a competitive dairy in the 


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southeastern Kentucky region. The proposed 

debarment for reporting violations would 

undermine much of the progress that 

Southern Belle has made, with FCS’s 

assistance and under its compliance program, 

over the past few years. It would also 

unavoidably require the consolidation of 

routes and the layoffs of many Southern Belle 

employees. Debarment would therefore hurt 

the local Somerset, Kentucky economy and 

would reduce competition for government 

dairy contracts in the region. 

Going forward, to insure that timely and 

accurate reporting is carried out under the 

Compliance Agreement, all Southern Belle 

management will be informed that they are 

to report actual or suspected misconduct to 

an Ethics Committee member within 24 

hours. Furthermore, the Ethics Committee 

(which now has two new members from 

Broughton Foods) will implement new 

procedures whereby, when a violation is 

reported, it will convene quickly using 

telephone and fax, conduct an investigation, 

and make a timely report. 

Finally, it appeared that there was a 

concern that the minutes of the September 

26, 1997 Ethics Committee may not have 

captured the discussion at that meeting with 

complete accuracy. It has been the practice 

to have the minutes of each meeting kept by 

one member, and not reviewed as a matter of 

course until the next meeting. To eliminate 

accuracy concerns in the future, Southern 

Belle will undertake to have the minutes 

typed and distributed to all members by the 

business day following the meeting, so that 

any omissions can be corrected immediately. 

In closing, Southern Belle would like to 

point out that there are a number of Kentucky 

state government contracts which are 

traditionally bid in February, including 

contracts for parks, universities, state 

hospitals, and vocational schools. Southern 

Belle would appreciate the ability to bid on 

these contracts, and submits that it is in the 

government’s interest to permit Southern 

Belle to compete for them. We therefore 

request that, if at all possible, this matter be 

resolved promptly so that Southern Belle 

may participate in the bidding for at least 

some of these contracts. 

Very truly yours, 

/s/ Joseph L. Ruby 

Joseph L. Ruby 

cc: Philip Cline, Martin Shearer, Steven 

Diamond, Esquire. 

Exhibit 1 

Agenda 

Meeting with Steve Christian 

May 15, 1997 

Items to be discussed: 

Company expectations in the following 

areas, 

1. Call on new business: 

This should be done on a consistent basis 

and should be scheduled so that we are not 

wasting time. 

2. Call on existing business: 

We need to continue to see existing 

business but not spend all our time on this 

effort. 

3. Respond to call sheets by routemen: 

This need to be followed-up on and results 

put in writing to the routemen with a copy 

to Zone Sales Manager. 

4. Fill out a customer call sheet daily and 

send to the Zone Sales Manager. 

5. Oversee and have responsibility for 

Branch operations, this does not mean to stay 

in the office. Steve can get a daily report from 

Larry when he is in the office from 3:00–5:00 

p.m. 

6. Will also be responsible for other duties 

assigned by the Zone Sales Manager, such as 

school bids, etc. 

Hours of work: 

8:00 a.m. to 3:00 p.m.—Mon. through 

Thurs.—In market 

3:00 p.m. to 5:00 p.m.—Mon. through 

Thurs.—Office 

8:00 a.m. to 12:00 p.m.—Friday—In market 

12:00 p.m. to 5:00 p.m.—Friday—Office 

Exhibit 2 

May 15, 1997 

Harold Soper and I met with Steve 

Christian at the Louisville Branch. We 

reviewed his job description and asked him 

if there was anything that he could not do, 

or was unwilling to do. Steve said that he did 

not want to make sales calls or call on 

existing business. We stressed that all Branch 

Managers did this and that it was an 

important part of his job. 

After reviewing the Job Description, we 

provided Steve with some basic forms to 

document sales calls and to be filled out by 

the routemen when they have prospect or 

need price information. 

We discussed with Steve the need to create 

a better work environment for the routemen 

as several had complained that they had been 

mistreated in some way. One routeperson 

reported that he was not receiving mail 

communication from Somerset, another said 

he was being used around the Branch for jobs 

that were not related to his route. 

We stressed to Steve that these matters, as 

well as others, must be improved. And that 

if he did not make some improvement during 

the next two months, he would be fired. I 

asked Steve if he understood what he was 

being asked to do, and he said he did. 

We made an agreement to meet within two 

months to review his progress. 

/s/ Mike Chandler 

Exhibit 3 

PROJECTED FROM ACTUAL 8/97–12/97 

School system Contract No. 1997–98 Sales 

Adair County Schools .................................................................................................................................. 21627 95,893.38 

Barbourville City Schools ............................................................................................................................. 22238 17,608.30 

Bath County Schools ................................................................................................................................... 29192 84,831.85 

Berea Community Schools .......................................................................................................................... 21352 26,750.62 

Bowling Green City Schools ........................................................................................................................ 27981 122,667.00 

Boyle County Schools ................................................................................................................................. 26130 37,890.91 

Breathitt County Schools ............................................................................................................................. 33238 143,257.60 

Bristol City (TN) Schools ............................................................................................................................. 34728 81,402.62 

Burgin City Schools ..................................................................................................................................... 26097 14,299.24 

Campbell County Schools ........................................................................................................................... 29969 250,504.95 

Clarksville Community (IN) .......................................................................................................................... 34815 30,299.82 

Corbin City Schools ..................................................................................................................................... 24627 72,999.58 

Cumberland County Schools ....................................................................................................................... 30004 41,371.73 

Danville City Schools ................................................................................................................................... 25979 56,280.46 

East Bernstadt School ................................................................................................................................. 21157 17,540.36 

Estill County Schools ................................................................................................................................... 25799 89,665.39 

Fayette County Schools .............................................................................................................................. 21100 608,675.03 

Green County Schools ................................................................................................................................ 26795 42,321.70 

Greeneville City Schools ............................................................................................................................. 30007 44,520.96 

Harrodsburg City Schools ............................................................................................................................ 33160 31,790.80 

Hart County Schools .................................................................................................................................... 28389 66,226.97 

Hazard Independent Schools ...................................................................................................................... 34848 27,636.88 

Jackson Independent Schools ..................................................................................................................... 34847 14,163.46 

Knox County Schools (KY) .......................................................................................................................... 21278 183,628.12 

Larue County Schools ................................................................................................................................. 29988 74,432.16 

Lee County Schools .................................................................................................................................... 24621 56,578.79 

Lexington Private Schools ........................................................................................................................... 15121 35,552.81 


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PROJECTED FROM ACTUAL 8/97–12/97—Continued 

School system Contract No. 1997–98 Sales 

Lincoln County Schools ............................................................................................................................... 24191 164,317.71 

Macon County Schools ................................................................................................................................ 23173 88,989.91 

Madison County Schools ............................................................................................................................. 25545 229,139.64 

McCreary County Schools ........................................................................................................................... 24237 140,930.13 

Meade County Schools ............................................................................................................................... 28454 153,510.34 

Menifee County Schools .............................................................................................................................. 24919 32,323.89 

Mercer County Schools ............................................................................................................................... 21763 52,000.58 

Metcalfe County Schools ............................................................................................................................. 28395 59,048.89 

Monroe County Schools .............................................................................................................................. 26543 77,986.33 

Monticello City Schools ............................................................................................................................... 21575 25,423.20 

Montgomery County Schools ...................................................................................................................... 24157 132,973.99 

Morgan County Schools .............................................................................................................................. 29503 103,785.66 

Nashville Metro Schools .............................................................................................................................. 23505 335,067.84 

Pickett County Schools ................................................................................................................................ 26661 28,096.62 

Pulaski County Schools ............................................................................................................................... 19140 294,978.80 

Putnam County Schools .............................................................................................................................. 27240 221,463.07 

Rockcastle County Schools ......................................................................................................................... 21088 87,306.99 

Rowan County Schools ............................................................................................................................... 28846 82,248.66 

Russell County Schools ............................................................................................................................... 26382 101,533.70 

Science Hill School ...................................................................................................................................... 29991 13,520.93 

Simpson County Schools ............................................................................................................................ 33154 70,436.38 

Somerset City Schools ................................................................................................................................ 13449 45,378.31 

Taylor County Schools ................................................................................................................................ 26781 74,838.52 

Van Buren County Schools ......................................................................................................................... 27118 26,809.74 

Wayne County Schools ............................................................................................................................... 26404 89,391.06 

West Clark Community (IN) ......................................................................................................................... 32001 60,298.90 

Whitley County Schools ............................................................................................................................... 32580 202,722.31 

Williamsburg City Schools ........................................................................................................................... 20425 27,033.50 

Total ...................................................................................................................................................... .............................. 5,390,347.09 

School system Contract No. Actual 

1996–97 sales 

Adair County Schools .................................................................................................................................. 21627 95,893.38 

Bath County Schools ................................................................................................................................... 29192 84,831.85 

Berea Community Schools .......................................................................................................................... 21352 26,750.62 

Bourbon County Schools ............................................................................................................................. 23293 95,217.02 

Boyle County Schools ................................................................................................................................. 26130 37,890.91 

Burgin City Schools ..................................................................................................................................... 26097 14,299.24 

Campbell County Schools ........................................................................................................................... 29969 250,504.95 

Caverna Independent Schools .................................................................................................................... 28461 35,597.42 

Clinton City Schools .................................................................................................................................... 23381 30,363.58 

Clinton County Schools ............................................................................................................................... 26260 57,222.29 

Cumberland County Schools ....................................................................................................................... 30004 41,371.73 

Danville City Schools ................................................................................................................................... 25979 56,280.46 

East Bernstadt School ................................................................................................................................. 21157 17,540.36 

Estill County Schools ................................................................................................................................... 25799 89,665.39 

Fayette County Schools .............................................................................................................................. 21100 608,675.03 

Garrard County Schools .............................................................................................................................. 24200 78,654.92 

Greeneville City Schools ............................................................................................................................. 30007 44,520.96 

Hardin County Schools ................................................................................................................................ 33249 367,140.54 

Harrodsburg City Schools ............................................................................................................................ 33160 31,790.80 

Hart County Schools .................................................................................................................................... 28389 66,226.97 

Knox County Schools (KY) .......................................................................................................................... 21278 183,628.12 

Lee County Schools .................................................................................................................................... 24621 56,578.79 

Lexington Private Schools ........................................................................................................................... 15121 35,552.81 

Lincoln County Schools ............................................................................................................................... 24191 164,317.71 

Macon County Schools ................................................................................................................................ 23173 88,989.91 

Madison County Schools ............................................................................................................................. 25545 229,139.64 

McCreary County Schools ........................................................................................................................... 24237 140,930.13 

Menifee County Schools .............................................................................................................................. 24919 32,323.89 

Mercer County Schools ............................................................................................................................... 21763 52,000.58 

Metcalfe County Schools ............................................................................................................................. 28395 59,048.89 

Monroe County Schools .............................................................................................................................. 26543 77,986.33 

Monticello City Schools ............................................................................................................................... 21575 25,423.20 

Montgomery County Schools ...................................................................................................................... 24157 132,973.99 

Morgan County Schools .............................................................................................................................. 29503 103,785.66 

Pickett County Schools ................................................................................................................................ 26661 28,096.62 

Powell County Schools ................................................................................................................................ 31815 91,315.15 

Pulaski County Schools ............................................................................................................................... 19140 294,978.80 


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School system Contract No. Actual 

1996–97 sales 

Putnam County Schools .............................................................................................................................. 27240 221,463.07 

Rockcastle County Schools ......................................................................................................................... 21088 87,306.99 

Russell County Schools ............................................................................................................................... 26382 101,533.70 

Science Hill School ...................................................................................................................................... 29992 13,520.93 

Simpson County Schools ............................................................................................................................ 33154 70,436.38 

Somerset City Schools ................................................................................................................................ 13449 45,378.31 

Van Buren County Schools ......................................................................................................................... 27118 26,809.74 

Wayne County Schools ............................................................................................................................... 26404 89,391.06 

Whitley County Schools ............................................................................................................................... 32580 202,722.31 

Total ...................................................................................................................................................... .............................. 4,786,071.13 

United States District Court, Eastern 

District of Kentucky, London Division 

United States of America, et al., 

Plaintiffs, v. Dairy Farmers of America, 

Inc., Defendant 

Civil Action No.: 6:03–206–KSF 

Final Judgment 

Whereas, plaintiffs, the United States 

of America and the Commonwealth of 

Kentucky, and defendant Dairy Farmers 

of America, Inc. (‘‘DFA’’), by their 

respective attorneys, have consented to 

the entry of this Final Judgment without 

this Final Judgment constituting any 

evidence against or admission by any 

party regarding any issue of fact or law; 

And whereas, the United States of 

American and the Commonwealth of 

Kentucky have concluded, after due 

investigation and careful consideration 

of the relevant circumstances, including 

the claims asserted in the Amended 

Complaint, and the legal and factual 

defenses thereto, that the public interest 

is served by entering into a Stipulation, 

to avoid the uncertainties of litigation 

and to assure that the benefits of this 

Final Judgment are obtained; 

And whereas, DFA agrees that venue 

and jurisdiction are proper in this Court; 

And whereas, DFA agrees to be bound 

by the provisions of this Final Judgment 

pending its approval by the Court; 

And whereas, the essence of this Final 

Judgment is the prompt and certain 

divestiture of the Divestiture Assets by 

DFA; 

And whereas, DFA, despite its belief 

that it has good defenses to the claims 

asserted against it in the Amended 

Complaint, has nevertheless agreed to 

enter into this Final Judgment to avoid 

further expense, inconvenience, the 

uncertainties of litigation, and the 

distraction of burdensome and 

protracted litigation, and thereby to put 

to rest this controversy with respect to 

the United States of America and the 

Commonwealth of Kentucky; 

And whereas, DFA, the United States 

of America, and the Commonwealth of 

Kentucky desire to resolve disputes 

between them concerning DFA’s 

acquisition of a partial interest in 

Southern Belle Dairy Co., LLC, without 

further Court proceedings except as set 

out below; 

And whereas, DFA has entered into a 

written agreement with AFLP to 

facilitate the resolution of this matter; 

And whereas, DFA has represented to 

the United States that the divestitures 

required below can and will be made 

and that DFA will later raise no claim 

of hardship or difficulty as grounds for 

asking the Court to modify any of the 

divestiture provisions contained below; 

Now therefore, before any testimony 

is taken, without trail or adjudication of 

any issue of fact or law, and upon 

consent of the parties, it is ordered, 

adjudged and decreed: 

I. Jurisdiction 

This Court has jurisdiction over the 

subject matter of and each of the parties 

to this action. The Complaint states a 

claim upon which relief may be granted 

against DFA under Section 7 of the 

Clayton Act, as amended (15 U.S.C. 

§ 18), and under the provisions of 

K.R.S.§ 367.110 et seq., but, by virtue of 

this Final Judgment, DFA has not and 

does not admit either the allegations set 

forth in the Complaint or any liability or 

wrongdoing. 

II. Definitions 

As used in this Final Judgment: 

A. ‘‘Acquirer’’ means the entity or 

entities to whom DFA or the trustee 

divest the Divestiture Assets. 

B. ‘‘AFLP’’ means the Allen Family 

Limited Partnership, managed by Robert 

Allen. 

C. ‘‘DFA’’ means Dairy Farmers of 

America, Inc., a Kansas corporation 

with its headquarters in Kansas City, 

Missouri, its successors and assigns, its 

subsidiaries and divisions, and their 

directors, officers, managers, agents, and 

employees. 

D. ‘‘Divestiture Assets’’ means any 

and all of DFA’s interests in the 

Southern Belle Dairy including DFA’s 

Series A Preferred Capital Interest and 

Series B Preferred Capital Interest, and 

any and all lines of credit or other loans 

that Mid-Am has extended to the 

Southern Belle Dairy, and any interest 

in the Southern Belle Dairy acquired 

from AFLP. 

E. ‘‘Mid-Am’’ means Mid-Am Capital 

LLC, a subsidiary of DFA and a 

Delaware limited liability company with 

its headquarters in Kansas City, 

Missouri, its successors and assigns, its 

subsidiaries and divisions, and their 

directors, officers, managers, agents, and 

employees. 

F. ‘‘Southern Belle Dairy’’ means the 

Southern Belle Dairy Co., LLC, a 

Delaware limited liability company that 

owns and operates a milk processing 

plant located in Pulaski County, 

Kentucky, and all related assets, 

including all rights and interests in it, 

including all property and contract 

rights, all existing inventory, accounts 

receivable, pertinent correspondence 

and files, customer lists, all related 

customer information, advertising 

materials, contracts or other 

relationships with suppliers, customers 

and distributors, any rights, contracts 

and licenses involving intellectual 

property, trademarks, tradenames or 

brands, computers and other physical 

assets and equipment used for 

production at, distribution from, or 

associated with, that plant or any of its 

distribution branches and locations. 

G. ‘‘Stipulation’’ means the 

Stipulation signed by the United States, 

the Commonwealth of Kentucky, and 

DFA in this matter. 

III. Applicability 

A. This Final Judgment applies to 

DFA, as defined above, and to all other 

persons in active concert or 

participation with any of them who 

receive actual notice of this Final 

Judgment by personal service or 

otherwise. 

B. DFA shall require, as a condition 

of the sale or other disposition of all or 

substantially all of DFA’s assets or of 

lesser business units that include the 

Divestiture Assets, that the purchaser 


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agrees to be bound by the provisions of 

this Final Judgment. DFA need not, 

however, obtain such an agreement from 

the Acquirer of the Divestiture Assets. 

IV. Divestitures 

A. DFA is ordered and directed 

within five days after notice of the entry 

of this Final Judgment by the Court, to 

divest the Divestiture Assess in a 

manner consistent with this Final 

Judgment to an Acquirer acceptable to 

the United States in its sole discretion, 

after consultation with the 

Commonwealth of Kentucky. The 

United States, in its sole discretion, after 

consultation with the Commonwealth of 

Kentucky, may agree to an extension of 

this time period for any divestiture of 

up to thirty additional calendar days. 

DFA agrees to use its best efforts to 

divest the Divestiture Assets as 

expeditiously as possible. 

B. DFA shall also use commercially 

reasonable efforts to cause AFLP to 

divest its interests in the Southern Belle 

Dairy to an acquirer acceptable to the 

United States in its sole discretion, after 

consultation with the Commonwealth of 

Kentucky. 

C. In accomplishing the divestitures 

ordered by this Final Judgment, DFA 

promptly shall make known to one or 

more potential purchasers the 

availability of the Divestiture Assets. 

DFA shall inform any potentially 

qualified purchaser making inquiry 

regarding a possible purchase of the 

Divestiture Assets that such assets are 

being offered for sale. 

D. DFA shall use commercially 

reasonable efforts to cause to be 

furnished to all prospective Acquirers, 

subject to the customary confidentiality 

assurances, all information and 

documents relating to the Divestiture 

Assets and the Southern Belle Dairy 

customarily provided in a due diligence 

process except such information or 

documents subject to the attorney-client 

privilege or attorney work-product 

doctrine. DFA shall make available such 

information to the United States and the 

Commonwealth of Kentucky at the same 

time that such information is made 

available to any other person. 

E. DFA shall use commercially 

reasonable efforts to obtain permission 

for prospective Acquirers of the 

Divestiture Assets to have reasonable 

access to personnel and to make 

inspections of the physical facilities of 

the Southern Belle Dairy; access to any 

and all environmental, zoning, and 

other permit documents and 

information; and access to any and all 

financial, operational, or other 

documents and information customarily 

provided as part of a due diligence 

process. 

F. DFA shall use commercially 

reasonable efforts to cause to be 

provided to the Acquirer and the United 

States information relating to the 

personnel involved in the operation of 

the Southern Belle Dairy to enable the 

Acquirer to make offers of employment. 

DFA shall not interfere with any 

negotiations by the Acquirer to employ 

any employee whose primary 

responsibility is the production, sale, 

marketing, or distribution of products 

from the Southern Belle Dairy. G. DFA shall not take any action that 

will impede in any way the operation of 

the Southern Belle Dairy of the 

divestiture of the Divestiture Assets. 

H. Unless the United States, in its sole 

discretion, after consultation with the 

Commonwealth of Kentucky, otherwise 

consents in writing, the divestiture 

pursuant to the Section IV, or by trustee 

appointed pursuant to Section V, of this 

Final Judgment, shall include the entire 

Divestiture Assets and shall be 

accomplished in such a way as to satisfy 

the United States, in its sole discretion, 

after consultation with the 

Commonwealth of Kentucky, that the 

Southern Belle Dairy will be a viable, 

ongoing dairy. The divestiture, whether 

pursuant to Section IV or Section V of 

this Final Judgment. 

(1) Shall be made to an Acquirer that, 

in the United States’ sole judgment, 

after consultation with the 

Commonwealth of Kentucky, has the 

intent and capability (including the 

necessary managerial, operational, 

technical and financial capability) of 

competing effectively in school and 

fluid milk markets in Kentucky and 

Tennessee; and 

(2) Shall be accomplished so as to 

satisfy the United States, in its sole 

discretion, after consultation with the 

Commonwealth of Kentucky, that none 

of the terms of any agreement between 

an Acquirer and DFA give DFA the 

ability unreasonably to raise the 

Acquirer’s costs, to lower the Acquirer’s 

efficiency, or otherwise to interfere in 

the ability of the Acquirer to compete 

effectively. 

V. Appointment of Trustee 

A. If DFA has not divested the 

Divestiture Assets within the time 

period specified in Section IV(A), DFA 

shall notify the United States of that fact 

in writing. Upon application of the 

United States, the Court shall appoint a 

trustee selected by the United States and 

approved by the Court to effect the 

divestiture of the Divestiture Assets. 

B. After the appointment of a trustee 

becomes effective, only the trustee shall 

have the right to sell the Divestiture 

Assets. The trustee shall have the power 

and authority to accomplish the 

divestiture to an Acquirer acceptable to 

the United States (after consultation 

with the Commonwealth of Kentucky) at 

such price and on such terms as are 

then obtainable upon reasonable effort 

by the trustee, subject to the provisions 

of Sections IV, V, and VI of this Final 

Judgment, and shall have such other 

powers as this Court deems appropriate. 

Subject to Section V(D) of this Final 

Judgment, the trustee may hire at the 

cost and expense of DFA any 

investment bankers, attorneys, or other 

agents, who shall be solely accountable 

to the trustee, reasonably necessary in 

the trustee’s judgment to assist in the 

divestiture. 

C. DFA shall not object to a sale by 

the trustee on any ground other than the 

trustee’s malfeasance. Any such 

objections by DFA must be conveyed in 

writing to the United States and the 

trustee within ten calendar days after 

the trustee has provided the notice 

required under Section VI. D. The trustee shall serve at the cost 

and expense of DFA, on such terms and 

conditions as the United States 

approves, after consultation with the 

Commonwealth of Kentucky, and shall 

account for all monies derived from the 

sale of the assets sold by the trustee and 

all costs and expenses so incurred. After 

approval by the Court of the trustee’s 

accounting, including fees for its 

services and those of any professionals 

and agents retained by the trustee, all 

remaining money shall be paid to DFA 

and the trust shall then be terminated. 

The compensation of the trustee and 

any professionals and agents retained by 

the trustee shall be reasonable in light 

of the value of the Divestiture Assets 

and based on a fee arrangement 

providing the trustee with an incentive 

based on the price and terms of the 

divestiture and the speed with which it 

is accomplished, but timeliness is 

paramount. E. DFA shall use its best efforts to 

assist the trustee in accomplishing the 

required divestiture. While the trustee 

shall have the right to sell the 

Divestiture Assets, DFA shall use 

commercially reasonable efforts to cause 

AFLP to divest its interests in the 

Southern Belle Dairy to an acquirer 

acceptable to the United States in its 

sole discretion, after consultation with 

the commonwealth of Kentucky. The 

trustee and any consultants, 

accountants, attorneys, and other 

persons retained by the trustee shall 

have full and complete access to the 

personnel, books, records, and facilities 

of the business to be divested, and DFA 

shall develop financial and other 

information relevant to such business as 

the trustee may reasonably request, 

subject to reasonable protection for 


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trade secret or other confidential 

research, development, or commercial 

information. DFA shall take no action to 

interfere with or to impede the trustee’s 

accomplishment of the divestiture. 

F. After its appointment, the trustee 

shall file monthly reports with the 

United States, the Commonwealth of 

Kentucky, DFA, and the court setting 

forth the trustee’s efforts to accomplish 

the divestiture ordered under this final 

Judgment. To the extent such reports 

contain information that the trustee 

deems confidential, such reports shall 

not be filed in the public docket of the 

Court and DFA’s copy of the reports 

shall have such confidential information 

redacted. Such reports shall include the 

name, address, and telephone number of 

each person who, during the preceding 

month, made an offer to acquire, 

expressed an interest in acquiring, 

entered into negotiations to acquire, or 

was contacted or made an inquiry about 

acquiring, any interest in the Divestiture 

Assets, and shall describe in detail each 

contact with any such person. The 

trustee shall maintain full records of all 

efforts made to divest the Divestiture 

Assets. 

G. If the trustee has not accomplished 

such divestiture within six months after 

its appointment, the trustee shall 

promptly file with the Court a report 

setting forth (1) the trustee’s efforts to 

accomplish the required divestiture, (2) 

the reasons, in the trustee’s judgment, 

why the required divestiture has not 

been accomplished, and (3) the trustee’s 

recommendations. To the extent such 

reports contain information that the 

trustee deems confidential, such reports 

shall not be filed in the public docket 

of the Court. The trustee shall at the 

same time furnish such report to the 

United States and the Commonwealth of 

Kentucky who shall have the right to 

make additional recommendations 

consistent with the purpose of the trust. 

The trustee shall at the same time 

furnish the report to DFA, but with all 

confidential information redacted. The 

Court thereafter shall enter such orders 

as it shall deem appropriate to carry out 

the purpose of the Final Judgment, 

which may, if necessary, include 

extending the trust and the term of the 

trustee’s appointment by a period 

required by the United States. 

H. If necessary in the trustee’s 

judgment to divest the Divestiture 

Assets, DFA shall use its best efforts to 

assist the trustee in dissolving the 

Southern Belle Dairy under Delaware 

Statute 6 Del. C. § 18–802, or such other 

applicable statutes and laws. 

VI. Notice of Proposed Divestitures 

A. Within two business days 

following execution of definitive 

divestiture agreement, DFA or the 

trustee, whichever is then responsible 

for effecting the divestiture required 

herein, shall notify the United States 

and the Commonwealth of Kentucky of 

the proposed divestiture required by 

Sections IV or V of this Final Judgment. 

If the trustee is responsible, it shall 

similarly notify DFA. The notice shall 

set forth the details of the proposed 

divestiture and list the name, address, 

and telephone number of each person 

not previously identified who offered or 

expressed an interest in or desire to 

acquire any ownership interest in the 

Divestiture Assets, together with full 

details of the same. 

B. Within fifteen calendar days of 

receipt by the United States of such 

notice, the United States may request 

from DFA, the proposed Acquirer, any 

other third party, or the trustee if 

applicable additional information 

concerning the proposed divestiture, the 

proposed Acquirer, and any other 

potential Acquirer. DFA and the trustee 

shall furnish any additional information 

requested within fifteen calendar days 

of the receipt of the request, unless the 

parties shall otherwise agree. 

C. Within thirty calendar days after 

receipt of the notice or within twenty 

calendar days after the United States has 

been provided the additional 

information requested from DFA, the 

proposed Acquirer, and third party, and 

the trustee, whichever is later, the 

United States shall provide written 

notice to DFA and the trustee is one, 

stating whether or not it objects to the 

proposed divestiture. If the United 

States provides written notice that it 

does not object, the divestiture may be 

consummated, subject only to DFA’s 

limited right to object to the sale under 

Section V(C) of this Final Judgment. 

Absent written notice that the United 

States does not object to the proposed 

Acquirer or upon objection by the 

United States, the divestiture proposed 

under Sections IV or Section V shall not 

be consummated. Upon objection by 

DFA under Section V(C), the divestiture 

proposed under Section V shall not be 

consummated unless approved by the 

Court. 

VII. Financing 

DFA shall not finance all or any part 

of any purchase made pursuant to 

Section IV or V or this Final Judgment. 

VIII. Supply Contracts 

DFA shall not require the Acquirer to 

enter into a supply contract for raw milk 

with DFA as a condition for the sale of 

the Divestiture Assets. 

IX. Affidavits 

A. Within twenty calendar days of 

DFA’s signing the Stipulation, and every 

thirty calendar days thereafter until the 

divestiture has been completed under 

Sections IV or V, DFA shall deliver to 

the United States an affidavit as to the 

fact and manner of its compliance with 

Section IV or V of this Final Judgment. 

Each such affidavit shall include the 

name, address, and telephone number of 

each person who, during the preceding 

thirty calendar days, made an offer to 

acquire, expressed an interest in 

acquiring, entered into negotiations to 

acquire, or was contacted or made an 

inquiry about acquiring, any interest in 

the Divestiture Assets, and shall 

describe in detail each contact with any 

such person during that period. Each 

such affidavit shall also include a 

description of the efforts DFA has taken 

to solicit buyers for the Divestiture 

Assets, and to provide required 

information to prospective purchasers, 

including the limitations, if any, on 

such information. Assuming the 

information set forth in the affidavit is 

true and complete, any objection by the 

United States to information provided 

by DFA, including limitation on 

information, shall be made within 

fourteen calendar days of receipt of such 

affidavit. 

B. Within twenty calendar days of 

DFA’s signing the Stipulation, DFA 

shall deliver to the United States an 

affidavit that describes in reasonable 

detail all actions DFA has taken and all 

steps DFA has implemented on an 

ongoing basis to comply with the 

Stipulation. DFA shall deliver to the 

United States an affidavit describing any 

changes to the efforts and actions 

outlined in DFA’s earlier affidavits filed 

pursuant to this section within fifteen 

calendar days after the change is 

implemented. 

C. DFA shall keep all records of all 

efforts made to preserve and divest the 

Divestiture Assets until one year after 

such divestiture has been completed. 

X. Compliance Inspection 

A. For the purposes of determining or 

securing compliance with this Final 

Judgment, or of determining whether 

the Final Judgment should be modified 

or vacated, and subject to any legally 

recognized privilege, from time to time 

duly authorized representatives of the 

Untied States Department of Justice or 

the Commonwealth of Kentucky, 

including consultants and other persons 

retained by either of them, shall, upon 

written request of a duly authorized 


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1The Commonwealth of Kentucky joined this 

lawsuit under 15 U.S.C. 26, and also sought relief 

pursuant to the provisions of K.R.S. § 367.110, et 

seq. 

representative of the Assistant Attorney 

General in charge of the Antitrust 

Division or the Attorney General for 

Kentucky, and on reasonable notice to 

DFA, be permitted: 

Access during DFA’s office hours to 

inspect and copy, or at plaintiffs’ option, to 

require DFA provide copies of, all books, 

ledgers, accounts, records and documents in 

the possession, custody, or control of DFA, 

relating to any matters contained in this Final 

Judgment; and 

To interview, either informally or on the 

record, DFA’s officers, employees, or agents, 

who may have their individual counsel 

present, regarding such matters. The 

interviews shall be subject to the reasonable 

convenience of the interviewee and without 

restraint or interference by DFA. 

B. Upon the written request of a duly 

authorized representative of the 

Assistant Attorney General in charge of 

the Antitrust Division or the Attorney 

General for Kentucky, DFA shall submit 

written reports and interrogatory 

responses, under oath if requested, 

relating to any of the matters contained 

in this Final Judgment as may be 

requested. 

C. No information or documents 

obtained by the means provided in this 

section shall be divulged by the United 

States or the Commonwealth of 

Kentucky to any person other than an 

authorized representative of the 

executive branch of the United States or 

the Commonwealth of Kentucky, except 

in the course of legal proceedings to 

which at least one of the plaintiffs is a 

party (including grand jury 

proceedings), or for the purpose of 

securing compliance with this Final 

Judgment, or as otherwise required by 

law. 

D. If at the time information or 

documents are furnished by DFA to the 

plaintiffs, DFA represents and identifies 

in writing the material in any such 

information or documents to which a 

claim of protection may be asserted 

under Rule 26(c)(7) of the Federal Rules 

of Civil Procedure, and DFA marks each 

pertinent page of such material, 

‘‘Subject to claim of protection under 

Rule 26(c)(7) of the Federal Rules of 

Civil Procedure,’’ then the plaintiffs 

shall give DFA ten calendar days notice 

prior to divulging such material in any 

legal proceeding (other than a grand jury 

proceeding). 

XI. Reacquisition of the Divestiture 

Assets 

Other than acquiring AFLP’s interests 

in the Southern Belle Dairy for resale to 

the Acquirer, DFA may not directly or 

indirectly reacquire in whole or in part 

the Divestiture Assets or any interest in 

the Southern Belle Dairy during the 

term of this Final Judgment without the 

prior written approval of the United 

States. Unless the United States 

otherwise agrees in writing, DFA will 

urge any partnership, joint venture, 

limited liability company, or other firm 

in which it has an equity interest, not 

to acquire the Divestiture Assets or any 

interest in Southern Belle Dairy during 

the term of this Final Judgment; such 

urging shall include, among other 

things, voting its interest, if applicable, 

against such an acquisition. 

XII. Retention of Jurisdiction 

This Court retains jurisdiction to 

enable any party to this Final Judgment 

to apply to this Court at any time for 

further orders and directions as may be 

necessary or appropriate to carry out or 

construe this Final Judgment, to modify 

any of its provisions, to enforce 

compliance, and to punish violations of 

its provisions. 

XIII. Expiration of Final Judgment 

Unless this Court grants an extension, 

this Final Judgment shall expire ten 

years from the date of its entry. 

XIV. Public Interest Determination 

Entry of this Final Judgment is in the 

public interest. 

Dated: lllllllllllllllll

Court approval subject to procedures of 

Antitrust Procedures and Penalties Act, 15 

U.S.C. 16. 

lllllllllllllllllllll

United States District Judge 

FILED ELECTRONICALLY 

United States District Court, Eastern 

District of Kentucky, London Division 

United States of America, et al. 

Plaintiffs, v. Dairy Farmers of America, 

Inc., et al., Defendants 

Civil Action No.: 6:03–206–KSF 

Competitive Impact Statement 

Pursuant to Section 2(b) of the 

Antitrust Procedures and Penalties Act 

(‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. 

16(b)–(h), plaintiff United States of 

America files this Competitive Impact 

Statement relating to the proposed Final 

Judgment submitted for entry in this 

civil antitrust proceeding. 

I. Nature and Purpose of This 

Proceeding 

The United States and the 

Commonwealth of Kentucky 

(collectively, the ‘‘government’’) filed a 

civil antitrust Complaint under Section 

15 of the Clayton Act, 15 U.S.C. 25, on 

April 24, 2003, alleging that the 

acquisition by Dairy Farmers of 

America, Inc. (‘‘DFA’’) of its interest in 

Southern Belle Dairy Co., LLC 

(‘‘Southern Belle’’) violated Section 7 of 

the Clayton Act (‘‘Section 7’’), 15 U.S.C. 

18.1 An Amended Complaint was filed 

on May 6, 2004. 

The Amended Complaint alleged that 

the acquisition may substantially lessen 

competition for the sale of milk sold to 

schools in one hundred school districts 

in eastern Kentucky and Tennessee. On 

August 31, 2004, the District Court 

granted summary judgment to DFA and 

Southern Belle. The government 

appealed, and on October 25, 2005, the 

Court of Appeals reversed the grant of 

summary judgment as to DFA and 

remanded the case for trial. The Court 

of Appeals affirmed the dismissal of 

Southern Belle, leaving DFA as the only 

defendant. See United States v. Dairy 

Farmers of America, 426 F.3d 850 (6th 

Cir. 2005). 

On October 2, 2006, the United States 

filed a proposed Final Judgment that 

requires DFA to divest its interest in 

Southern Belle and use its best efforts to 

require its partner, the Allen Family 

Limited Partnership (‘‘AFLP’’), to also 

divest its interest in Southern Belle. 

DFA has proposed divesting its interest 

and AFLP’s interest in Southern Belle to 

Prairie Farms Dairy, Inc. (‘‘Prairie 

Farms’’), and the government has 

approved Prairie Farms as a suitable 

buyer of DFA’s and AFLP’s interest in 

Southern Belle. The proposed Final 

Judgement is designed to eliminate the 

anticompetitive effects of the 

acquisition alleged in the Amended 

Complaint. 

The government and DFA have 

stipulated that the proposed Final 

Judgment may be entered after 

compliance with the APPA. Entry of the 

proposed Final Judgment would 

terminate this action, except that the 

Court would retain jurisdiction to 

construe, modify, or enforce the 

provisions of the proposed Final 

Judgment and to punish violations 

thereof. 

II. The Alleged Violations 

A. The Defendants 

Dairy Farmers of America (‘‘DFA’’) is 

a Kansas milk marketing cooperative 

with its headquarters and principal 

place of business in Kansas City, 

Missouri. DFA is the largest dairy 

cooperative in the world. DFA sells raw 

milk in interstate commerce. In 2005, 

DFA had 20,000 members in 49 states, 

marketed 59.7 billion pounds of raw 


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2These groups of school districts require bidders 

to charge the same price to the entire group, require 

successful bidders to serve all of group’s districts 

at the same price, and require the group’s members 

to accept the group bid. 

milk in the United States, and had over 

$8.9 billion in revenues. 

Southern Belle Dairy Co., LLC 

(‘‘Southern Belle’’) owns the Southern 

Belle dairy processing plant. Southern 

Belle is a Delaware limited liability 

company with its headquarters and 

principal place of business in Somerset, 

Kentucky. Southern Belle processed 

approximately 25 million gallons of raw 

milk in 2001 and had annual revenues 

of approximately $65 million that year. 

Southern Belle sells fluid milk in 

interstate commerce, including milk to 

school districts in Kentucky and 

Tennessee. 

B. The Acquisition 

Southern Belle was formed by DFA on 

February 20, 2002. It acquired the assets 

of the Southern Belle dairy plant on 

February 25, 2002. On February 26, 

2002, DFA’s joint venture partner AFLP 

acquired 50 percent of Southern Belle. 

The purchase price of the Southern 

Belle dairy plant was approximately 

$18.7 million: $2 million in common 

equity; $4 million in preferred equity; 

and the rest paid through of a line of 

credit. DFA and AFLP each contributed 

$1 million in exchange for each 

receiving 50 percent of the common 

interests in Southern Belle. A subsidiary 

of DFA contributed $4 million in 

exchange for preferred equity interests 

and extended to Southern Belle the line 

of credit used to finance the remaining 

$12.7 million of the purchase price. 

C. Anticompetitive Effects of the 

Acquisition 

The Amended Complaint alleged that 

the manufacture, distribution, and sale 

of school milk constitutes a relevant 

product market. Milk is a product that 

has special nutritional characteristics 

and no practical substitutes. Dairies sell 

milk to schools with special services, 

including storage coolers, daily or 

every-other-day delivery to each school, 

constant rotation of old milk, and 

replacement of expired milk. Moreover, 

school districts must provide milk in 

order to receive substantial funds under 

Federal school meal subsidy programs. 

There are no other products that school 

districts would substitute for school 

milk in the event of a small but 

significant price increase. 

The Amended Complaint alleged that 

the relevant geographic markets in 

which to assess the competitive effects 

of the acquisition are the school districts 

in eastern Kentucky and Tennessee 

identified in Attachments A and B of 

the Amended Complaint, either as 

individual districts or, where 

applicable, as groups of districts that 

solicit school milk bids together.2 As a 

practical matter, these school districts 

are unable to turn to additional school 

milk suppliers, who would not bid for 

their school milk contracts even if the 

price of school milk were to increase by 

a small but significant amount. 

The Amended Complaint alleged that 

DFA’s acquisition of its interest in 

Southern Belle would lessen 

competition substantially in the sale of 

school milk in each of the school 

districts identified in the Amended 

complaint. These districts receive 

school milk bids from Southern Belle 

and dairies operated by National Dairy 

Holdings, LP (‘‘NDH’’), a dairy holding 

company also 50 percent-owned by 

DFA. Some affected districts and groups 

of districts also receive bids from a third 

supplier. One of the NDH-operated 

dairies that serves the affected school 

districts is the Flav-O-Rich dairy, 

located in London, Kentucky, only 30 

miles from the Southern Belle plant in 

Somerset, Kentucky. The transaction 

lessened competition for school districts 

receiving milk contract bids from both 

Southern Belle and NDH because, as a 

result of the transaction, both Southern 

Belle and NDH were 50 percent-owned 

by DFA. Since any contracts won by 

Southern Belle from NDH, or vice versa, 

through aggressive bidding would likely 

reduce DFA’s profits, reduced 

competition between Southern Belle 

and NDH is in DFA’s interest. 

In 45 of the school districts listed in 

the Amended Complaint, the effect of 

the acquisition has been to establish a 

monopoly, with only Southern Belle 

and Flav-O-Rich (or another NDH dairy) 

as possible milk suppliers. In these 

districts, the acquisition would give 

DFA the incentive and ability to 

encourage, facilitate, or enforce 

cooperation between Southern Belle and 

NDH to raise prices or decrease the level 

or quality of service provided to these 

school districts. In 55 school districts 

listed in the Amended Complaint, the 

acquisition has reduced the number of 

independent competitors from three to 

two, making it likely that the remaining 

bidders will bid less aggressively against 

each other. 

The Amended complaint also alleged 

that entry into the affected markets by 

other dairies or distributors would not 

be timely, likely, or sufficient to deter 

the anticompetitive effects caused by 

the acquisition. Dairies or distributors 

not currently competing in the affected 

markets would be unlikely to start 

bidding as a result of a small but 

significant increase in school milk 

prices. This is supported by the lack of 

new entry into these markets when 

competition between Southern Belle 

and Flav-O-Rich has been reduced. 

First, in the 1980s, these two dairies 

rigged bids for school milk contracts for 

many of the school districts affected by 

the acquisition. Despite an increase in 

school milk prices, new entry did not 

occur in these markets to undermine the 

bid-rigging conspiracy, which lasted for 

over ten years. Second, competition 

between Southern Belle and Flav-ORich was eliminated in some districts 

when Southern Belle was suspended 

from bidding on certain school milk 

contracts from 1998 to 2000 by the U.S. 

Department of Agriculture for violating 

provisions of an antitrust compliance 

program. Again, for those districts 

affected by the loss of Southern Belle as 

a bidder for school milk contracts, 

relative prices for school milk rose and 

new entry did not occur to return prices 

to a competitive level. 

For all of these reasons, the 

government concluded that the 

transaction would substantially lessen 

competition in the sale of school milk 

in the school districts in Kentucky and 

Tennessee identified in the Amended 

Complaint, by increasing prices and/or 

reducing quality, all in violation of 

Section 7 of the Clayton Act. Indeed, the 

government found evidence that, after 

the transaction, bids to districts where 

Southern Belle and Flav-O-Rich were 

the only bidders were higher than bids 

received by other districts with only two 

bidders, though this was not true before 

the transaction. 

III. Explanation of the Proposed Final 

Judgment 

The divestiture requirement of the 

proposed Final Judgment will eliminate 

the anticompetitive effects identified in 

the Amended Complaint by requiring 

DFA to divest its interest in Southern 

Belle. In addition, the proposed Final 

Judgment requires DFA to use 

commercially reasonable efforts to cause 

AFLP to divest its interest in Southern 

Belle. The proposed Final Judgment 

requires the United States, in 

consultation with the Commonwealth of 

Kentucky, to approve any buyer of 

DFA’s and AFLP’s interests in Southern 

Belle. The divestitures must be 

accomplished in such a way as to satisfy 

the United States, in its sole discretion, 

after consultation with the 

Commonwealth of Kentucky, that 

Southern Belle will be a viable, ongoing 

dairy business capable to competing 

effectively in the sale of school and 

fluid milk in Kentucky and Tennessee. 


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The effect of these divestitures would be 

to restore competition between 

Southern Belle and NDH, with the 

divestiture of AFLP’s interest allowing a 

buyer of Southern Belle to acquire the 

entire dairy as a going concern, rather 

than as a 50 percent owner in 

conjunction with AFLP. During the 

divestiture process, DFA is prohibited 

from taking any steps to degrade the 

operations of Southern Belle, and the 

entire Southern Belle dairy business is 

to be sold through the divestiture, 

instead of piecemeal, so it can and will 

be operated by the purchaser as a viable, 

ongoing business that can compete 

effectively in the relevant markets. In 

addition, DFA is not permitted to 

finance any part of a purchaser’s 

acquisition of the Southern Belle dairy 

and is prohibited from requiring the 

purchaser to enter into a raw milk 

supply contract with DFA as a condition 

of the divestiture. 

The government and DFA reached 

agreement on the terms of the proposed 

Final Judgment and signed the 

Stipulation on May 15, 2006. That same 

day, DFA and AFLP executed an option 

agreement giving DFA the ability to 

purchase AFLP’s ownership interest in 

Southern Belle. This option agreement 

allows DFA to sell the dairy in its 

entirety rather than just DFA’s partial 

ownership interest in the dairy. Not 

only would a complete transfer of 

Southern Belle to a new owner 

eliminate the government’s concerns 

about DFA’s ownership interests in both 

Southern Belle and Flav-O-Rich, the 

divestitures also eliminate the 

possibility of anticompetitive effects as 

a result of DFA’s ability to influence 

AFLP, its long-time business partner. 

In exchange for DFA’s agreement to 

divest its interest in Southern Belle and 

use its best efforts to have AFLP do the 

same, and so that DFA could find a 

buyer for the dairy, the government 

agreed in a letter agreement with DFA 

dated May 15, 2006, not to file the 

Stipulation and proposed Final 

Judgment until the earlier of 120 days 

after signing the Stipulation, or DFA 

gave notice that it executed an 

agreement with a buyer. A copy of this 

letter agreement is provided as Exhibit 

A to this Competitive Impact Statement. 

If DFA was not able to find a buyer for 

Southern Belle after 120 days had 

elapsed, DFA agreed that the 

government could file the Stipulation 

and proposed Final Judgment. 

If a buyer for Southern Belle were not 

found by five days after DFA receives 

notice of the entry of the proposed Final 

Judgment, the Final Judgment provides 

that the Court will appoint a trustee 

selected by the United States to effect 

the divestiture. The proposed Final 

Judgment allows the United States to 

delay the appointment of the trustee for 

thirty days. If a trustee is appointed, the 

proposed Final Judgment provides that 

DFA will pay all costs and expenses of 

the trustee. The trustee’s commission 

will be structured so as to provide an 

incentive for the trustee based on the 

price obtained and the speed with 

which the divestiture is accomplished. 

After his or her appointment becomes 

effective, the trustee will file monthly 

reports with the Court and the United 

States setting forth his or her efforts to 

accomplish the divestiture. At the end 

of six months, if the divestiture has not 

been accomplished, the trustee and the 

United States will make 

recommendations to the Court, which 

shall enter such orders as appropriate, 

in order to carry out the purpose of the 

trust, including extending the trust or 

the term of the trustee’s appointment. 

The divestitures required by the 

proposed Final Judgment eliminate the 

harm to competition identified in the 

Amended Complaint by making 

Southern Belle completely independent 

from DFA and NDH, including the FlavO-Rich dairy. Prairie Farms’ purchase of 

Southern Belle accomplishes this goal of 

the proposed Final Judgment. Prairie 

Farms will be purchasing Southern 

Belle as a complete going concern, 

including the plant in Somerset, 

Kentucky, distribution facilities, 

equipment, and trademarks. The 

government believes that Prairie Farms 

can capably operate and manage 

Southern Belle, as it already owns and 

operates several dairy processing plants. 

The government believes that Southern 

Belle will continue to bid on school 

milk contracts under Prairie Farms’

ownership, including against Flav-ORich and other NDH dairies. The 

divestiture of DFA’s and AFLP’s 

interests in Southern Belle to Prairie 

Farms has allowed the government to 

secure relief more quickly than if the 

matter had gone to trial. In addition, this 

relief is equal to, and probably exceeds, 

the relief that the government could 

have obtained after a victory at trial. 

IV. Remedies Available to Potential 

Private Litigants 

Section 4 of the Clayton Act (15 

U.S.C. 15) provides that any person who 

has been injured as a result of conduct 

prohibited by the antitrust laws may 

bring suit in Federal court to recover 

three times the damages the person has 

suffered as well as costs and reasonable 

attorneys’ fees. Entry of the proposed 

Final Judgment will neither impair nor 

assist the bringing of any private 

antitrust damage action. Under the 

provisions of Section 5(a) of the Clayton 

Act (15 U.S.C. § 16(a)), the proposed 

Final Judgment has no prima facie effect 

in any subsequent private lawsuit that 

may be brought against DFA or 

Southern Belle. 

V. Procedures Available for 

Modification of the Proposed Final 

Judgment 

The parties have stipulated that the 

proposed Final Judgment may be 

entered by the Court after compliance 

with the provisions of the APPA, 

provided that the United States has not 

withdrawn its consent. The APPA 

conditions entry upon the Court’s 

determination that the proposed Final 

Judgment is in the public interest. 

The APPA provides a period of at 

least sixty (60) days preceding the 

effective date of the proposed Final 

Judgment within which any person may 

submit to the United States written 

comments regarding the proposed Final 

Judgment. Any person who wishes to 

comment should do so within sixty (60) 

days of the date of publication of this 

Competitive Impact Statement is 

published in the Federal Register, or the 

last date of publication in a newspaper 

of the summary of this Competitive 

Impact Statement, whichever is later. 

All comments received during this 

period will be considered by the 

Department of Justice, which remains 

free to withdraw its consent to the 

proposed Final Judgment at any time 

prior to the Court’s entry of judgment. 

The comments and the response of the 

United States will be filed with the 

Court and published in the Federal 

Register. 

Written comments should be 

submitted to: Mark J. Botti, Chief, 

Litigation I Section, Antitrust Division, 

U.S. Department of Justice, 1401 H St. 

NW., Suite 4000, Washington, DC 

20530. 

The proposed Final Judgment 

provides that the Court retains 

jurisdiction over this action, and the 

parties may apply to the Court for any 

order necessary or appropriate for the 

modification, interpretation, or 

enforcement of the Final Judgment. 

VI. Alternatives to the Proposed Final 

Judgment 

The government considered, as an 

alternative to the proposed Final 

Judgment, a full trial on the merits of 

the Amended Complaint against DFA, 

continuing the litigation and seeking the 

divestiture of DFA’s interest in Southern 

Belle and other injunctive relief 

requested in the Amended Complaint. 

The government is satisfied, however, 

that the divestitures and other relief 


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3 In 2004, Congress amended the APPA to ensure 

that courts take into account the above-quoted list 

of relevant factors when making a public interest 

determination. Compare 15 U.S.C. 16(e) (2004) with 

15 U.S.C. 16(e)(1) (2006) (substituting ‘‘shall’’ for 

‘‘may’’ in directing relevant factors for court to 

consider and amending list of factors to focus on 

competitive considerations and to address 

potentially ambiguous judgment terms). On the 

points discussed herein, the 2004 amendments did 

not alter the substance of the Tunney Act, and the 

pre-2004 precedents cited below remain applicable. 

4Cf. BNS, 858 F.2d at 464 (holding that the 

court’s ‘‘ultimate authority under the [APPA] is 

limited to approving or disapproving the consent 

decree’’); United States v. Gillette Co., 406 F. Supp. 

713, 716 (d. Mass. 1975) (noting that, in this way, 

the court is constrained to ‘‘look at the overall 

picture not hypercritically, nor with a microscope, 

but with an artist’s reducing glass’’); see generally 

Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the 

remedies [obtained in the decree are] so 

inconsonant with the allegations charged as to fall 

outside of the ‘reaches of the public interest’ ’’). 

contained in the proposed Final 

Judgment will preserve competition in 

the relevant markets alleged in the 

Amended Complaint. The government 

believes that by requiring DFA to divest 

its interest in Southern Belle, as well as 

using its best efforts to have AFLP 

simultaneously divest its interest in the 

remaining 50 percent of the dairy, the 

relief obtained in the proposed Final 

Judgment has allowed the government 

to secure relief more quickly than if the 

matter had gone to trial. In addition, the 

relief is equal to, and probably exceeds, 

the relief that the government could 

have obtained after a victory at trial. 

VII. Standard of Review Under the 

APPA for Proposed Final Judgment 

The APPA requires that proposed 

consent judgments in antitrust cases 

brought by the United States be subject 

to a sixty (60)-day comment period, after 

which the Court shall determine 

whether entry of the proposed Final 

Judgment ‘‘is in the public interest.’’ 15 

U.S.C. 16(e)(1). In making that 

determination, the Court shall consider: 

(A) The competitive impact of such 

judgment, including termination of alleged 

violations, provisions for enforcement and 

modification, duration of relief sought, 

anticipated effects of alternative remedies 

actually considered, whether its terms are 

ambiguous, and any other competitive 

considerations bearing upon the adequacy of 

such judgment that the court deems 

necessary to a determination of whether the 

consent judgement is in the public interest; 

and 

(B) The impact of entry of such judgment 

upon competition in the relevant market or 

markets, upon the public generally and 

individuals alleging specific injury from the 

violations set forth in the complaint 

including consideration of the public benefit, 

if any, to be derived from a determination of 

the issues at trial. 

15 U.S.C. 16(e)(1)(A) and (B) 3 As the 

United States Court of Appeals for the 

District of Columbia Circuit has held, 

under the APPA a court considers, 

among other things, the relationship 

between the remedy secured and the 

specific allegations set forth in the 

government’s complaint, whether the 

decree is sufficiently clear, whether 

enforcement mechanisms are sufficient, 

and whether the decree may positively 

harm third parties. See United States v. 

Microsoft Corp., 56 F.3d 1448, 1458–62 

(D.C. Cir. 1995). 

With respect to the adequacy of the 

relief secured by the decree, a court may 

not ‘‘engage in an unrestricted 

evaluation of what relief would best 

serve the public.’’ United States v. BNS, 

Inc., 858 F.2d 456, 462 (9th Cir. 1988) 

(citing United States v. Bechtel Corp., 

648 F.2d 660, 666 (9th Cir. 1981)); see 

also Microsoft, 56 F.3d at 1460–62. 

Courts have held that: 

[t]he balancing of competing social and 

political interests affected by a proposed 

antitrust consent decree must be left, in the 

first instance, to the discretion of the 

Attorney General. The court’s role in 

protecting the public interest is one of 

insuring that the government has not 

breached its duty to the public in consenting 

to the decree. The court is required to 

determine not whether a particular decree is 

the one that will best serve society, but 

whether the settlement is ‘‘within the reaches 

of the public interest.’’ More elaborate 

requirements might undermine the 

effectiveness of antitrust enforcement by 

consent decree. 

Bechtel, 648 F.2d at 666 (emphasis 

added) (citations omitted).4 In making 

its public interest determination, a 

district court must accord due respect to 

the government’s prediction as to the 

effect of proposed remedies, its 

perception of the market structure, and 

its views of the nature of the case. 

United States v. Archer-DanielsMidland Co., 272 F. Supp. 2d 1, 6 

(D.D.C. 2003). 

Court approval of a final judgment 

requires a standard more flexible and 

less strict than the standard required for 

a finding of liability. ‘‘[A] proposed 

decree must be approved even if it falls 

short of the remedy the court would 

impose on its own, as long as it falls 

within the range of acceptability or is 

‘within the reaches of public interest’ ’’

United States v. Am. Tel. & Tel. Co., 552 

F. Supp. 131, 151 (D.D.C. 1982) 

(citations omitted) (quoting United 

States v. Gillette Co., 406 F. Supp. 713, 

716 (D. Mass. 1985)), aff’d sub nom. 

Maryland v. United States, 460 U.S. 

1001 (1983); see also United States v. 

Alcan Aluminum Ltd., 605 F. Supp. 619, 

622 (W.D. Ky. 1985) (approving the 

consent decree even though the court 

would have imposed a greater remedy). 

Moreover, the Court’s role under the 

APPA is limited to reviewing the 

remedy in relationship to the violations 

that the United States has alleged in its 

Amended Complaint, and does not 

authorize the Court to ‘‘construct [its] 

own hypothetical case and then 

evaluate the decree against that case.’’

Microsoft, 56 F.3d at 1459. Because the 

‘‘court’s authority to review the decree 

depends entirely on the government’s 

exercising its prosecutorial discretion by 

bringing a case in the first place,’’ it 

follows that ‘‘the court is only 

authorized to review the decree itself,’’

and not to ‘‘effectively redraft the 

complaint’’ to inquire into other matters 

that the United States did not pursue. 

Id. at 1459–60. 

In its 2004 amendments to the 

Tunney Act, Congress made clear its 

intent to preserve the practical benefits 

of utilizing consent decrees in antitrust 

enforcement, adding the unambiguous 

instruction ‘‘[n]othing in this section 

shall be construed to require the court 

to conduct an evidentiary hearing or to 

require the court to permit anyone to 

intervene.’’ 15 U.S.C. 16(e)(2). This 

language codified the intent of the 

original 1974 statute, expressed by 

Senator Tunney in the legislative 

history: ‘‘[t]he court is nowhere 

compelled to go to trial or to engage in 

extended proceedings which might have 

the effect of vitiating the benefits of 

prompt and less costly settlement 

through the consent decree process.’’

119 Cong. Rec. 24,598 (1973) (statement 

of Senator Tunney). Rather: 

[a]bsent a showing of corrupt failure of the 

government to discharge its duty, the Court, 

in making its public interest finding, should 

* * * carefully consider the explanations of 

the government in the competitive impact 

statement and its responses to comments in 

order to determine whether those 

explanations are reasonable under the 

circumstances. 

United States v. Mid-American 

Dairymen, Inc., 1977–1 Trade Cas. 

(CCH) ¶ 61,508, at 71,980 (W.D. Mo. 

1977). 

VIII. Determinative Documents 

In formulating the proposed Final 

Judgment, the United States considered 

DFA’s agreement with AFLP, dated May 

15, 2006, giving DFA the option to 

purchase AFLP’s interest in Southern 

Belle. This agreement, a determinative 

document as described in Section 2(b) 

of the APPA, 15 U.S.C. 16(b), is 

available for public inspection at the 

office of the Department of Justice in 

Washington, DC, Room 200, 325 

Seventh Street, NW., and at the office of 


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the Clerk of the United States District 

Court for the Eastern District of 

Kentucky, London, Kentucky, as Exhibit 

B to this Competitive Impact Statement. 

Dated: October 2, 2006. 

Respectfully Submitted, 

Jon B. Jacobs, Richard Martin, N. Christopher 

Hardee, Richard D. Cooke, Ihan Kim, 

Attorneys, Litigation I Section, Antitrust 

Division, United States Department of 

Justice, City Center Building, 1401 H. Street 

NW., Suite 4000, Washington, DC 20530. 

Telephone: 202–307–0001. Facsimile: 202–

307–5802. E-mail: ihan.kim@usdoj.gov. 

Certificate of Service 

This certifies that I caused a true and 

correct copy of the foregoing Competitive 

Impact Statement to be served on October 2, 

2006, in the manner indicated: 

David A. Owen, Esq., Greenebaum Doll & 

McDonald, PLLC, 300 West Vine Street—

Suite 1100, Lexington, KY 40507, Counsel for 

Dairy Farmers of America, Inc. (via e-mail 

and first-class mail). 

W. Todd Miller, Esq., Baker & Miller, 

PLLC, 2401 Pennsylvania Ave., Suite 300, 

Washington, DC 20037, Counsel for Dairy 

Farmers of America, Inc. (via e-mail and firstclass mail). 

John M. Famularo, Esq., Stites & Harbison 

PLLC, 250 West Main Street, Suite 2300, 

Lexington, Kentucky 40507, Counsel for 

Dean Foods Company (via e-mail and firstclass mail). 

John L. Fleischaker, Esq., R. Kenyon 

Meyer, Esq., Jeremy S. Rogers, Esq., Dinsmore 

& Shohl LLP, 1400 PNC Plaza, 500 West 

Jefferson Street, Louisville, Kentucky 40202, 

Counsel for Chicago Tribune Company (via email and first-class mail). 

Charles E. Shivel, Jr., Esq., Stoll Keenon 

Ogden PLLC, 300 West Vine Street—Suite 

2100, Lexington, KY 40507, Counsel for 

Southern Belle Dairy Co., LLC (via e-mail and 

first-class mail). 

J. Jackson Eaton, III, Esq., Gross, McGinley, 

LaBarre & Eaton, LLP, P.O. Box 4600—33 

South Seventh Street, Allentown, PA 18105, 

Counsel for Southern Belle Dairy Co., LLC 

(via e-mail and first-class mail). 

Maryellen B. Mynear, Esq., Office of the 

Kentucky Attorney General, 1024 Capital 

Center Drive, Suite 200, Frankfort, KY 40601, 

Counsel for Commonwealth of Kentucky (via 

e-mail and first-class mail). 

/s/ Ihan Kim, 

Attorney for Plaintiff, United States of 

America. 

Exhibit A—Letter Agreement Between the 

United States, Commonwealth of Kentucky, 

and Dairy Farmers of America, Inc. 

U.S. Department of Justice 

Antitrust Division 

May 15, 2006 

Via Hand Delivery 

W. Todd Miller, Esq., 

Baker & Miller, PLLC, 2401 Pennsylvania 

Avenue, NW., Suite 300, Washington, DC 

2005 

Re: United States of America, et al. v. Dairy 

Farmers of America, et al. 

Dear Todd: This letter sets forth the 

agreement among the Department of Justice 

(‘‘the Department’’), the Commonwealth of 

Kentucky (‘‘the Commonwealth’’), and Diary 

Farmers of America, Inc. (‘‘DFA’’) regarding 

the Stipulation and proposed Final Judgment 

in this matter. Except as discussed below, the 

Department and the Commonwealth agree 

not to file the Stipulation and proposed Final 

Judgment with the Court until the earlier of 

(1) 120 calendar days after DFA’s signing of 

the Stipulation or (2) the day after DFA gives 

notice to the United States and the 

Commonwealth pursuant to Section VI.A of 

the proposed Final Judgment that DFA has 

executed a divestiture agreement with a 

proposed Acquirer of the Divestiture Assets. 

During this period, however, the Department 

and the Commonwealth reserve the right to 

file the Stipulation and proposed Final 

Judgment with the Court under seal should 

they, in their sole discretion, determine after 

giving 15 days written notice of its reasons 

to DFA that DFA is not complying with the 

terms of the Stipulation and proposed Final 

Judgment. The Department will exercise its 

sole discretion under this letter agreement 

and the Final Judgment in good faith in light 

of the relevant facts, law, and public policy. 

Beginning immediately with DFA’s signing 

of the Stipulation, DFA must comply with all 

obligations and prohibitions set forth in the 

Stipulation and proposed Final Judgment 

including keeping the Department and the 

Commonwealth informed as to DFA’s actions 

seeking an Acquirer. 

If this accurately sets forth the agreement 

among the Department, the Commonwealth 

and DFA, please execute a copy of this letter 

on behalf of DFA and return the copy to me. 

Sincerely, 

Mark J. Botti, 

For the United States Department of Justice. 

Maryellen B. Mynear, 

For the Commonwealth of Kentucky. 

Agreed: 

W. Todd Miller, 

Counsel for Dairy Farmers of America, Inc. 

Date: May 15, 2006 

cc. David A. Owen. 

Exhibit B—Determinative Document 

Pursuant to 15 U.S.C. 16(b): Option 

Agreement Between Dairy Farmers of 

America, Inc. and Allen Family Limited 

Partnership 

Redacted 

Public Version 

Option Agreement 

This OPTION AGREEMENT is dated and 

made effective as of the 15th day of May, 

2006, among DAIRY FARMERS OF 

AMERICA, INC., a Kansas cooperative 

marketing association (‘‘DFA’’), and ALLEN 

FAMILY LIMITED PARTNERSHIP, a 

Pennsylvania limited partnership (‘‘AFLP’’). 

Recitals 

WHEREAS, AFLP is the owner of one 

hundred percent (100%) of the common 

member interest (‘‘AFLP Interests’’) of 

Southern Belle Dairy Co., LLC, a Delaware 

limited liability company (‘‘Southern Belle’’); 

and 

WHEREAS, DFA is or will become the 

owner of the [REDACTED] of Series A 

Preferred Capital Interest and the 

[REDACTED] of Series B Preferred Capital 

Interest in Southern Belle, plus all lines of 

credit or other loans from Mid-Am Capital, 

L.L.C., (‘‘DFA Interests’’); and 

WHEREAS, DFA is a defendant in an 

action filed by the United States of America 

through its Department of Justice (‘‘DOJ’’) 

and by the Commonwealth of Kentucky and 

pending in the United States District Court 

for the Eastern District of Kentucky originally 

titled United States of America and the 

Commonwealth of Kentucky v. Dairy Farmers 

of America, Inc. and Southern Belle Dairy 

Co., LLC, Civil Action No. 6:03–cv–206–KSF 

(the ‘‘DOJ Litigation’’); 

WHEREAS, DFA and AFLP have been in 

discussions regarding the possibility of 

entering into a purchase agreement 

(‘‘Purchase Agreement’’) relating to all of the 

AFLP Interests, subject to and conditioned on 

(i) full and final settlement of the DOJ 

Litigation and (ii) DFA’s ability and the DOJ’s 

acceptance and/or acquiescence to DFA 

concurrently entering into a definitive 

purchase agreement relating to the sale of the 

DFA and AFLP Interests and/or the sale of all 

or substantially all of the operational assets 

of Southern Belle Dairy (‘‘Assets’’) with a 

third-party purchaser (‘‘Acquirer’’), pursuant 

to which an Acquirer would purchase both 

the DFA and the AFLP Interests and/or the 

Assets from DFA (the ‘‘Acquisition 

Agreement’’); and 

WHEREAS, in furtherance of the 

discussions and as a condition precedent to 

the DFA’s obligation to purchase the AFLP 

Interests from AFLP, and for the additional 

consideration set forth herein, the AFLP 

desires to grant, and herein does grant, to 

DFA an option to purchase the AFLP 

interests according to the terms and subject 

to the conditions set forth in this Agreement. 

NOW, THEREFORE, in consideration of the 

premises herein and the representations, 

warranties, covenants and agreements 

contained herein, the receipt and legal 

sufficiency of which are hereby 

acknowledged, the parties hereto agree as 

follows: 

1. Grant of Option. AFLP hereby grants to 

DFA an unconditional, irrevocable option 

(the ‘‘Option’’) to purchase, subject to the 

terms and conditions hereof, the AFLP 

Interests for the total sum of [REDACTED] 

(‘‘Purchase Price’’) payable in cash at the 

time of closing. The Option shall terminate 

upon the earliest to occur of: (i) the written 

mutual agreement of DFA and AFLP to 

terminate the Option; or (ii) the delivery of 

at least ten (10) days prior written notice 

from DFA to AFLP that DFA has decided to 

terminate the Option. The Option may only 

be exercised during the period from the date 

hereof through the first date to occur of 

clause (i) or (ii) of the immediately preceding 

sentence (the ‘‘Option Period’’). 

2. Option Grant Payment. Upon the 

execution of this Option Agreement by the 

parties hereto, DFA shall remit to AFLP the 

amount of One Thousand Dollars ($1,000) 

and other good and valuable consideration, 


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the receipt of which is hereby acknowledged 

by AFLP for the grant of the Option by AFLP 

pursuant to this Agreement. 

3. Exercise of Option by DFA. 

(a) DFA shall exercise the Option for the 

AFLP Interests, but only upon (i) full and 

final settlement of the DOJ Litigation and (ii) 

DFA’s ability and DOJ’s acceptance and/or 

acquiescence to DFA concurrently entering 

into a definitive Acquisition Agreement 

relating to the sale of the AFLP and DFA 

Interests and/or the sale of all or substantially 

all of the Assets with an Acquirer during the 

Option Period. The Option may not be 

exercised in part, but may only be exercised 

for all of the AFLP Interests subject to this 

Agreement and as set forth in the Purchase 

Agreement. 

(b) At the closing (‘‘Closing’’), DFA shall 

pay to AFLP the Purchase Price by wire 

transfer of immediately available funds to an 

account designated by such AFLP or by 

delivery of a certified check to the AFLP 

address listed on the signature page to this 

Agreement. 

At the Closing, and upon confirmation of 

the satisfaction of the conditions set forth in 

Section 3(a)(i) and (ii) above, simultaneously 

with the payment of the Purchase Price as 

provided for hereinabove, (i) DFA will 

execute the Acquisition Agreement pursuant 

to terms and conditions mutually agreed 

between DFA and such Acquirer. 

4. Conditions Precedent to Closing by DFA. 

AFLP, as manager of Southern Belle Dairy, 

LLC, hereby represents and warrants to DFA 

as follows: 

(a) AFLP shall offer to furnish to all 

prospective Acquirers from DFA, subject to 

customary confidentiality assurances, all 

information and documents relating to the 

AFLP Interests or Assets of the Southern 

Belle Dairy provided in a due diligence 

process except such information or 

documents subject to the attorney-client 

privilege or attorney work-product doctrine. 

AFLP shall make available such information 

to the United States and the Commonwealth 

of Kentucky at the same time that such 

information is made available to any such 

prospective Acquirer. 

(b) AFLP shall permit prospective 

Acquirers from DFA of the AFLP Interests 

and/or the Assets to have reasonable access 

to personnel and make inspections of the 

physical facilities of the Southern Belle 

Dairy; access to any and all environmental, 

zoning and other permit documents and 

information; and access to any and all 

financial, operational or other documents 

and information customarily provided as part 

of a due diligence process. 

(c) AFLP shall provide the Acquirer from 

DFA and the United States information 

relating to the personnel involved in the 

operation of the Southern Belle Dairy to 

enable the Acquirer to make offers of 

employment. AFLP shall not interfere with 

any negotiations by the Acquirer to employ 

any employee whose primary responsibility 

is the production, sale, marketing or 

distribution of products from the Southern 

Belle Dairy. 

(d) AFLP shall not take any action that will 

impede in any way the operation of the 

Southern Belle Dairy or the divestiture of the 

AFLP and DFA Interests and/or the Assets by 

DFA. 

(e) AFLP shall not change the authorized 

or issued AFLP or DFA Interests or grant any 

option or right to purchase such Interests 

other than as set forth herein. 

(f) AFLP shall not amend the 

organizational document of Southern Belle. 

(g) AFLP shall not damage or cause the loss 

of any material customer, asset or property of 

Southern Belle Dairy. 

(h) AFLP shall not incur any indebtedness 

or borrow money in excess of Three Hundred 

Thousand Dollars ($300,000). 

(i) AFLP shall not cause a material change 

in the accounting methods used by Southern 

Belle Dairy. 

(j) AFLP shall not enter into a sale or 

transfer of any of the assets of Southern Belle 

Dairy except in the ordinary course of 

business. 

(k) AFLP shall not enter into any contract 

or agreement to do any of the foregoing. 

5. Representations, Warranties and 

Covenants of AFLP. 

(a) AFLP hereby represents and warrants to 

DFA the following: (i) AFLP has sole and 

exclusive record title to and ownership of the 

AFLP Interests that are the subject of this 

Agreement; (ii) the AFLP Interests are free 

and clear of any liens, restrictions, claims, 

charges, options, rights of first refusal or 

encumbrances, with no defects of title 

whatsover, except as provided in the Second 

Amended and Restated Limited Liability 

Company Agreement of Southern Belle Dairy 

Co., LLC; (iii) with respect to any AFLP 

Interests which were acquired by gift or 

inheritance, all federal and state estate or gift 

tax returns, as the case may be, required to 

be filed were duly and timely filed, and all 

taxes payable with respect thereto were paid; 

(iv) AFLP has the requisite power and 

authority to execute and deliver this 

Agreement and to consummate the 

transactions contemplated hereby; (v) the 

execution and delivery of this Agreement and 

the consummation of the transactions 

contemplated hereby have been duly and 

validly authorized by AFLP and authorized 

by the required governing body prior to the 

date hereof and no other proceedings on the 

part of AFLP or consents from or filings with 

any person or entity or regulatory body are 

necessary to authorize this Agreement, for 

AFLP to perform its obligations hereunder or 

to consummate the transactions 

contemplated hereby, except as provided in 

the Second Amended and Restated Limited 

Liability Company Agreement of Southern 

Belle Dairy Co., LLC; (vi) this Agreement has 

been duly and validly executed and 

delivered by AFLP; and (vii) this Agreement 

constitutes a legal, valid and binding 

obligation of AFLP, enforceable against AFLP 

in accordance with its terms. 

(b) AFLP hereby covenants that, during the 

period described in the following sentence, it 

will maintain ownership interest in and to all 

of the AFLP Interests, and will not, directly 

or indirectly, offer for sale, sell, distribute, 

grant any option, right to purchase, suffer any 

lien or encumbrance upon, pledge, 

hypothecate or otherwise dispose of any of 

the AFLP Interests. The restrictions in the 

foregoing sentence shall apply from the date 

of this Agreement until the earlier to occur 

of (i) the purchase of all of the AFLP Interests 

pursuant to the exercise of the Option or (ii) 

the termination of the Option Period. 

(c) AFLP hereby represents and warrants to 

DFA and covenants for the benefit of DFA 

that at Closing, AFLP shall deliver such 

executed instruments of assignment, as 

applicable, evidencing the sale and transfer 

of the AFLP Interests to DFA or a bill of sale 

and any other documents, instruments or 

certificates necessary to evidence the transfer 

of any of the Assets. 

6. Representations, Warranties and 

Covenants of DFA. DFA hereby represents 

and warrants to AFLP as follows: (i) DFA has 

the requisite corporate power and authority 

to execute and deliver this Agreement and to 

perform its obligations hereunder; (ii) 

contingent on and subject to full and final 

settlement of the DOJ Litigation and the 

simultaneous execution of an Acquisition 

Agreement with an Acquirer as described 

herein and subject to the conditions set forth 

herein, the execution and delivery of the 

Agreement by DFA and the performance of 

its obligations hereunder, have been duly and 

validly authorized by the Board of Directors 

of DFA and no other corporate proceedings 

on the part of the DFA or consents from for 

filings with any person or entity or regulatory 

body, other than the provisions of the 

Revised and Restated Limited Liability 

Company Agreement of Southern Belle, are 

necessary to authorize this Agreement, for 

DFA to perform its obligations hereunder; 

(iii) this Agreement has been duly and 

validly executed and delivered by DFA; and 

(iv) this Agreement constitutes a legal, valid 

and binding obligation of the DFA 

enforceable against DFA in accordance with 

its terms, subject to full and final settlement 

of the DOJ Litigation and ability of DFA to 

simultaneously execute of an Acquisition 

Agreement with an Acquirer of the Assets 

and/or the DFA and AFLP Interests from 

DFA, and subject to the conditions set forth 

herein. 

7. Amendments: Entire Agreement. This 

Agreement may not be modified except by 

written instrument executed by the parties 

hereto. This Agreement contains the entire 

agreement among the parties hereto with 

respect to the transactions contemplated 

hereby and supersedes all prior 

understandings, representations, warranties, 

promises and undertakings between the 

parties hereto with respect to the transactions 

contemplated hereby. 

8. Assignment. Neither of the parties hereto 

may assign any of its rights or obligations 

under this Agreement or the Option created 

hereunder to any other person without the 

express written consent of the other party. 

9. Validity. If any term, provision, covenant 

or restriction contained in this Agreement is 

held by a court or a federal or state regulatory 

agency of competent jurisdiction to be 

invalid, void or unenforceable, the remainder 

of the terms, provisions and covenants and 

restrictions contained in this Agreement shall 

remain in full force and effect, and shall in 

no way be affected, impaired or invalidated; 

provided that each party is able to receive 

substantially all of the rights and 

substantially all of the benefits it is to have 


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had/or receive, as applicable, under this 

Agreement. 

10. Notices. All notices, requests, claims, 

demands and other communications 

hereunder shall be deemed to have been duly 

given when delivered in person, by fax, 

telecopy, or by registered or certified mail 

(postage prepaid, return receipt requested) at 

the address set forth on the signature page 

hereto. 

11. Governing Law. This Agreement shall 

be governed by and construed in accordance 

with the laws of the State of Delaware 

applicable to contracts made and to be 

performed entirely in that State and without 

regard to any of its conflicts of law principles 

which could result in the application of the 

laws of another jurisdiction. 

12. Counterparts. This Agreement may be 

executed in multiple counterparts, each of 

which shall be deemed to be an original, but 

all of which shall constitute one and the 

same agreement. This Agreement may be 

executed by facsimile signature, which shall 

constitute a legal and valid signature for all 

purposes hereof. This Agreement shall not be 

effective until counterparts executed by 

AFLP and DFA have been delivered to each 

of them. 

13. Costs. Except as otherwise expressly 

provided for herein, each of the parties 

hereto shall bear and pay all costs and 

expenses incurred by it or on its behalf in 

connection with the transactions 

contemplated hereunder, including fees and 

expenses of its accountants and counsel. 

14. Additional Documents. In the event of 

the exercise of the Option by DFA, DFA and 

AFLP agree to execute and deliver all other 

documents and instruments and take all 

other action that may be reasonably 

requested in writing by the other party hereto 

in order to consummate the transactions 

provided for by such exercise and to 

effectuate the intents of this Agreement, but 

not including any indemnities, warranties, 

representations or similar covenants other 

than with respect to good title to the AFLP 

interests to be assigned and transferred. 

In Witness Whereof, each of the parties has 

caused this Agreement to be executed 

individually or on its behalf by its officers 

thereunto duly authorized, all as of the date 

first above written. 

ALLEN FAMILY LIMITED PARTNERSHIP 

By: /s/ Robert W. Allen. 

Name: Robert W. Allen. 

Title: General Partner, 2400 Ballybunion 

Road, Center Valley, Pennsylvania 18034. 

DAIRY FARMERS OF AMERICA, INC. 

By: /s/ David A. Geisler. 

Name: David A. Geisler. 

Title: Senior Vice-President/Legal, 10220 

North Ambassador Drive, Kansas City, 

Missouri 64153. 

Acknowledgement and Consent 

The undersigned specifically 

acknowledges and consents to the 

transactions as set forth in the Agreement 

and will cooperate to effectuate the 

consummation of said transactions insofar as 

legally necessary and reasonably appropriate. 

MID–AM CAPITAL, L.L.C. 

By: Dairy Farmers of America, Inc., as sole 

manager. 

By: /s/ David G. Meyer. 

Name: David G. Meyer. 

Title: Senior Vice President/Finance. 

[FR Doc. 06–8795 Filed 11–3–06; 8:45 am] 

BILLING CODE 4410–11–M 

DEPARTMENT OF LABOR 

Office of the Secretary 

Submission for OMB Review: 

Comment Request 

October 31, 2006. 

The Department of Labor (DOL) has 

submitted the following public 

information collection request (ICR) to 

the Office of Management and Budget 

(OMB) for review and approval in 

accordance with the Paperwork 

Reduction Act of 1995 (Pub. L. 104–13, 

44 U.S.C. Chapter 35). A copy of this 

ICR, with applicable supporting 

documentation, may be obtained by 

calling the Department of Labor. A copy 

of this ICR, with applicable supporting 

documentation, may be obtained at 

http://www.reginfo.gov/public/do/ 

PRAMain, or contact Ira Mills on 202–

693–4122 (this is not a toll-free number) 

or e-mail: Mills.Ira@dol.gov. 

In July 2004, ETA solicited comments 

from the general public on the 

establishment of a single, streamlined 

reporting and recordkeeping system, 

formally called the ETA Management 

Information and Longitudinal 

Evaluation (EMILE) reporting system. 

The notice of 60-day public comment on 

the proposed EMILE reporting system 

was published in the Federal Register 

on July 16, 2004 (Vol. 69, No. 136, pages 

42777–42779). The proposed EMILE 

reporting system was designed to 

streamline 12 ETA program reporting 

systems into one comprehensive 

reporting structure that would allow for 

consistent, comparable analysis across 

ETA funded employment and training 

programs, using the definitions for a set 

of common performance measures 

initially specified in Training and 

Employment Guidance Letter (TEGL) 

15–03, Common Measures Policy, and 

subsequently revised by TEGL 17–05, 

Common Measures Policy for the 

Employment and Training 

Administration’s (ETA) Performance 

Accountability System and Related 

Performance Issues. 

ETA received comments from 161 

unique entities, including state 

workforce agencies and boards, local 

workforce investment areas, non-profit 

organizations and national associations, 

Native American and other tribal 

organizations, public interest and 

advocacy groups, and other private 

citizens and stakeholders. Due to the 

large volume of comments submitted by 

each entity, ETA worked during 

calendar year 2005 to organize and 

analyze the public comments, make 

appropriate revisions to agency policy 

guidance on the common measures, and 

assess the feasibility of implementing 

the proposed EMILE reporting 

requirements in several States. 

ETA has reconciled the public 

comments and made appropriate 

revisions to the original EMILE 

proposal, which has been re-named to 

the Workforce Investment Streamlined 

Performance Reporting (WISPR) system. 

This revised proposal will replace the 

current quarterly reporting requirements 

of the following seven ETA activities: 

Wagner-Peyser Act, Veterans 

Employment and Training Service, the 

Workforce Investment Act (WIA) Adult, 

WIA Dislocated Worker, WIA Youth, 

and Trade Adjustment Assistance Act 

programs, and National Emergency 

Grants. 

The Department is seeking or has 

already received separate OMB 

clearances on revisions to the following 

program reporting systems to 

incorporate standardized data collection 

necessary to implement a set of common 

performance measures: National Farm 

Worker Jobs Program, Indian and Native 

American Program, Senior Community 

Service and Employment Program, and 

entities receiving H–1B Technical Skills 

Training or Responsible Reintegration of 

Youthful Offenders grants. These 

programs will continue to report 

separately, and the data elements 

collected for these programs have been 

aligned, to the extent practicable, with 

those in the proposed WISPR System. 

The decision to not include these 

programs in the WISPR System was 

based on concerns about burden (time 

and resources) expressed by many 

commenters. 

While the proposed WISPR System 

represents a comprehensive data 

collection and reporting approach, it is 

important to note that every effort has 

been made to establish common data 

definitions and formats with minimum 

burden to grantees. At its foundation, 

the proposed WISPR System organizes 

customer information that is maintained 

by states in order to run their day-to-day 

operations, and includes a minimum 

level of information collection that is 

necessary to comply with Equal 

Opportunity requirements, hold states 

and grantees appropriately accountable 

for the Federal funds they receive, and 

allow the Department to fulfill its 


rwilkins on PROD1PC63 with NOTICES