660 F.2d 192 (6th Cir. 1981), 79-3438, United States v. Dairymen, Inc.

Docket Nº:79-3438, 79-3439.
Citation:660 F.2d 192
Party Name:UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee, v. DAIRYMEN, INC., Defendant-Appellee, Cross-Appellant.
Case Date:September 21, 1981
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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660 F.2d 192 (6th Cir. 1981)

UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee,

v.

DAIRYMEN, INC., Defendant-Appellee, Cross-Appellant.

Nos. 79-3438, 79-3439.

United States Court of Appeals, Sixth Circuit

September 21, 1981

Argued June 12, 1981.

Rehearing Denied Dec. 22, 1981.

Rehearing and Rehearing En Banc Denied Feb. 10, 1982.

Page 193

Nancy C. Garrison, U. S. Dept. of Justice, Robert B. Nicholson, Antitrust Div., Appellate Section, Barry Grossman, Washington, D. C., for the U. S.

D. Paul Alagia, Barnett & Alagia, Joseph M. Day, Ronald L. Gaffney, Louisville, Ky., Morton Hollander, William A. Carey, John F. Sherlock, III, William S. Glading, Barnett, Alagia & Carey, Washington, D. C., for Dairymen, Inc.

Before JONES, Circuit Judge, CECIL, Senior Circuit Judge and BERTELSMAN, [*] District Judge.

PER CURIAM.

The United States appeals from a judgment dismissing that portion of its action which alleged that Dairymen, Inc. (D.I.) attempted to monopolize the market in Grade A milk in the Southeastern United States. D.I. appeals from that portion of the district court's judgment which held that it violated Section 3 of the Clayton Act by requiring its milk haulers to enter exclusive hauling contracts.

D.I. is an agricultural cooperative marketing association of dairy farmers which markets Grade A milk in the Southeastern United States. The Government alleged that D.I. used its market power to attempt to monopolize the market in Grade A milk. Its complaint asserted that D.I.: (1) forced milk processors to execute full supply and committed supply contracts to eliminate competitors from the market in violation of Section 3 of the Clayton Act; (2) imposed exclusive dealing contracts on its milk haulers; (3) foreclosed competition by acquiring customers from its competitors; (4) pooled milk without regard to the profits or losses which resulted from pooling; and (5) used restrictive membership agreements. The Government sought to enjoin D.I. from continuing these practices.

The district court found that D.I. entered into 91 full supply or committed supply agreements with milk processors. 1 In order to secure these agreements, D.I. threatened to withhold milk from several processors. 2 D.I. also required milk haulers in Indiana and in Nashville, Tennessee, to haul milk for D.I. exclusively. The reason D.I. gave for imposing exclusive hauling contracts was to prevent the comingling of its members' milk with lower quality milk.

The district court dismissed the attempt to monopolize charge because the Government failed to prove that D.I.'s anticompetitive practices rose to the level of predatory trade practices and because the Government failed to prove that there was a dangerous probability that a monopoly would result from D.I.'s practices. It found that D.I.'s exclusive hauling contracts were over restrictive and enjoined their use. The court also found that D.I.'s membership agreements, which required those joining the cooperative to remain members for two

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years, were not unreasonable. Finally, the district court found that D.I.'s pooling practices in Mississippi were illegal, but it did not issue an injunction because there was no probability that these practices...

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