Federal Inquiry Into Bid Rigging Spans 8 States

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The U.S. Justice Department's investigation into bid-rigging schemes by companies that sell foods to schools has broadened to include eight Southeastern states, Education Week has learned.

The agency's findings over the last 24 months of illegal practices in sales to schools of milk in Florida and bread in North Carolina prompted the broader probe, state and federal officials said last week.

Charles C. Kirby, regional director of the school-nutrition program of the U.S. Department of Agriculture, said his agency and the Justice Department had responded to evidence of antitrust violations in food contracts with schools by entering into a joint investigation.

Justice Department officials have refused to comment on the probe.

According to Mr. Kirby, however, state school-nutrition directors from Florida, Georgia, South Carolina, North Carolina, Kentucky, Alabama, Tennessee, and Mississippi were asked during a meeting last fall to submit to federal officials their records of milk and bread bids for the past five years.

The investigation is largely preliminary in nature and does not mean that schools in all of the states have been victimized by bid-rigging, Mr. Kirby stressed.

But the Justice Department investigation is reportedly heating up in Georgia, where Michael J. Bowers, the state attorney general, also is conducting his own probe. There is "a significant likelihood" that suspected milk bid-rigging could have cost school districts "tens of millions of dollars," Mr. Bowers said.

Stan McWhorter, director of food services for the Dougherty County, Ga., schools, said the Justice Department had asked him to submit bid records for the past 15 years.

Six dairy employees and two firms in Florida have been charged with criminal antitrust violations as a result of a federal probe there.

Five dairies named by the Florida attorney general's office in two antitrust lawsuits--which led to the imposition of more than $30 million in civil penalties--also do business in Georgia.

In North Carolina, four bakery companies were convicted in January of price-fixing and ordered to pay $1 million in damages to 36 school districts.--ps

Vol. 08, Issue 37

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