Three School-Milk Suppliers Indicted on Price-Fixing Charges

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WASHINGTON--Three dairies were indicted in late July and early August on charges that they participated in an alleged conspiracy to fix prices for school-milk contracts, the Justice Department has announced.

The indictments brought to 40 the total number of dairies charged with such offenses since the department began an investigation of school-milk suppliers three years ago.

"It has become clear with the rapidly expanding scope of our dairy-products prosecutions that incidents of collusion have been epidemic in the dairy industry," said Judy Whalley, acting assistant attorney general for the department's antitrust division.

The investigation has spread to 16 states, and more may be involved, according to a spokesman.

To date, 38 defendants have pleaded guilty, 16 persons have been sentenced to jail, one plea agreement is pending, two defendants are awaiting trial, seven have been acquitted, and charges have been dropped against two others, the spokesman said, adding that the Justice Department has sought fines and damages worth $21 million.

In its most recent announcements, the department alleged that:

  • The Maryland and Virginia Milk Producers Cooperative Association Inc. of Reston, Va., conspired with other milk producers between 1984 and 1987 to "submit collusive, noncompetitive, and rigged bids" for some school-board milk contracts. The company, known as Marva Maid, also is charged with mail fraud and making false statements.

    Attorney General Mary Sue Terry of Virginia filed suit last month against Marva Maid and three other companies-Embassy Dairy, Maela Milk and Ice Cream Company, and Southland Corporation--in connection with the charges.

  • Holland Dairies Inc. of Holland, Ind., conspired to rig milk bids in western Kentucky as early as the mid-1970's. The department spared New Paris Creamery Company Inc. of New Paris, Ind., and London's Farm Dairy Inc. of Port Huron, Mich., from prosecution for cooperating with probe investigators.
  • Flav-O-Rich Inc. of Louisville, Ky., has conspired to rig bids in Florida since the late 1960's. As the charges were filed, the company agreed to settle all criminal and civil liabilities for a total of $5 million and plead guilty on all counts.

Dairies Plead Guilty

In addition to the indictments, the department announced last month that two other dairies have agreed to plead guilty to charges of bid rigging.

Pet Inc. of St. Louis has agreed to pay a fine of $3.5 million for rigging milk bids in Greensboro, N.C.; Norfolk, Va.; Atlanta; and Columbia, S.C.

Coble Dairy Products Cooperative Inc. agreed to pay a $425,000 fine for rigging bids in Wilmington, N.C., and Atlanta.

About 25 million students participate in school-lunch programs daily. Much of the milk included in such programs is paid for by Agriculture Department subsidies.

Vol. 11, Issue 01, Page 40

Published in Print: September 4, 1991, as Three School-Milk Suppliers Indicted on Price-Fixing Charges
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