Justice Department Probing Milk Bid-Rigging in Georgia

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In the wake of a successful antitrust probe of Florida milk distributors, the U.S. Justice Department is reported to have joined the Georgia attorney general's office in investigating whether dairy-company officials there rigged bids before submitting them for school milk contracts.

Justice Department officials refused last week to confirm or deny that they have mounted a criminal investigation of milk suppliers and distributors in Georgia.

However, Jerome W. Hoffman, head of the antitrust division of the Florida attorney general's office, said last week that Georgia school districts he contacted during his investigation told him the U.S. Justice Department already had requested the same bidding information from them.

Georgia's attorney general, Michael J. Bowers, said there was "a significant likelihood" that local school districts in the state have been the victims of violations of antitrust laws and that suspected bid-rigging could have cost the districts "tens of millions of dollars" over the 10-year period being investigated by his office.

Under Georgia law, the victims of antitrust violations can obtain damages and lawyers' fees equal to three times the amount of their loss. To help him deal with the complexities of the milk investigation, Mr. Bowers has hired three special assistant attorneys general from an Atlanta law firm that has done research on suspected bid-rigging nationwide.

One of the special attorneys, W. Gordon Hamlin Jr., said that "the dairy industry has had a history of antitrust violations," but that he was not aware of any recent investigations outside of Georgia and Florida.

Mr. Bowers said that at the suggestion of Werner Rogers, the state school superintendent, he had contacted all public-school superintendents in Georgia to ask if they wanted to authorize the attorney general's office to represent them in the investigation and any resulting suit. Ninety-seven superintendents have responded affirmatively and none has refused the offer, Mr. Bowers said.

The attorney general said he did not know whether the suspected bid-rigging incidents in Georgia represented a spillover from the Florida case or a separate scheme.

One of three men convicted of antitrust violations in the Florida case, Timothy P. Tanna, sold milk in both Georgia and Florida for Flav-O-Rich Inc., Mr. Hoffman said.

Five dairies named by Florida's attorney general in two civil antitrust suits also do business in Georgia. They are Kinnett Dairies of Columbus, Ga.; Flav-O-Rich; Borden Inc.; Pet Inc.; and Land of Sun Dairies, which owns Atlanta Dairies Inc.

In all, Florida has sued seven dairy companies and recovered a total of $32.2 million.

The U.S. Justice Department has brought criminal antitrust charges against six dairy employees in Florida and two firms, Sunny Florida Dairy Inc. and jth Investment Company. It has obtained a civil settlement from jth of $10,000.

Officials of the Florida attorney general's office alleged that milk producers there agreed to submit artificially high bids to school districts so that the predetermined winners of contracts would be able to sell milk at inflated prices.

Vol. 08, Issue 35, Page 4

Published in Print: May 24, 1989, as Justice Department Probing Milk Bid-Rigging in Georgia
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