[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Notices]
[Pages 42715-42716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20162]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Suiza Foods Corp. and Broughton Foods Co.; 
Public Comments and Response

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that Public Comments and 
Plaintiff's Response have been filed with the United States District 
Court for the Eastern District of Kentucky, London Division, in United 
States v. Suiza Foods Corporation and Broughton Foods Company, Dkt. No. 
99-CV-130.
    On March 18, 1999, the United States filed a civil antitrust 
Complaint in the United States District Court for the Eastern District 
of Kentucky, London Division, alleging that the proposed acquisition of 
Broughton Foods Company (``Broughton'') by Suiza Foods Corporation 
(``Suiza'') would violate section 7 of the Clayton Act, 15 U.S.C. 18. 
The Complaint alleges that Suiza and Broughton compete to sell milk to 
school districts, that in 55 school districts located in South Central 
Kentucky the acquisition is likely to substantially lessen competition 
in the sale of school milk, and that therefore school districts and 
students would likely pay higher school milk prices or experience lower 
school milk quality and service.
    A proposed Final Judgment embodying the settlement of this case was 
filed with the Court on April 28, 1999, along with a Competitive Impact 
Statement describing the Complaint and proposed Final Judgment. The 
Competitive Impact Statement and invitation for public comments were 
published in the Federal Register on May 17, 1999. Such comments, and 
the response thereto, are hereby published in the Federal Register and 
filed with the Court.
    Copies of the Complaint, Stipulation, proposed Final Judgment, 
Competitive Impact Statement, Public Comments and Plaintiff's Response 
also may be inspected in Room 3233 of the Antitrust Division, 
Department of Justice, Tenth Street and Pennsylvania Avenue, NW., 
Washington, DC 20530 (telephone: 202/633-2481) and at the office of the 
Clerk of the United States District Court for

[[Page 42716]]

the Eastern District of Kentucky, London Division, 300 South Main 
Street, London, Kentucky 40741.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
Director of Operations & Merger Enforcement.

United States District Court Eastern District of Kentucky, London 
Division

[Civil Action No. 99-CV-130]

    United States of America, Plaintiff, vs. Suiza Foods 
Corporation, d/b/a Louis Trauth Dairy, Land O'Sun Dairy, and Flav-O-
Rich Dairy, and Broughton Foods Company, 
d/b/a Southern Belle Dairy, Defendants.

Plaintiff's Response to Public Comments

    Plaintiff, the United States of America, pursuant to the Antitrust 
Procedures and Penalties Act (``Tunney Act''), 15 U.S.C. 16(b)-(h), 
hereby files the Response to Public Comments relating to the proposed 
Final Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    Plaintiff filed a civil antitrust Complaint on March 18, 1999, in 
United States District Court for the Eastern District of Kentucky, 
London Division, alleging that the proposed acquisition of Broughton 
Foods Company (``Broughton'') by Suiza Foods Corporation (``Suiza'') 
would violate section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint 
alleges that Suiza and Broughton compete to sell milk to school 
districts, that in 55 school districts located in South Central 
Kentucky the acquisition is likely to substantially lessen competition 
in the sale of school milk, and that therefore school districts and 
students would likely pay higher school milk prices or experience lower 
school milk quality and service.
    The prayer for relief seeks: (a) An adjudication that the 
transaction described in the Complaint would violate section 7 of the 
Clayton Act; (b) preliminary and permanent injunctive relief preventing 
the consummation of the transaction; (c) an award to the United States 
of the costs of this action; and (d) such other relief as is proper.
    After this suit was filed, a proposed settlement was reached that 
permits Suiza to complete its acquisition of Broughton while preserving 
competition in the sale of milk in South Central Kentucky school 
districts where the transaction has raised competitive concerns. A 
Stipulation and proposed Final Judgment embodying the settlement were 
filed with the Court on April 28, 1999, along with a Competitive Impact 
Statement describing the Complaint and proposed Final Judgment. The 
Competitive Impact Statement and invitation for public comments were 
published in the Federal Register on May 17, 1999.
    If entered by the Court, the proposed Final Judgment would order 
Suiza to divest the entire operations of one of Broughton's dairy 
plants, Southern Belle Dairy, based in Pulsaki County, Kentucky, and 
all its related assets. Southern Belle dairy is the one Broughton 
entity that competes for the sale of milk in all of the school 
districts alleged in the Complaint to be affected by the merger. Unless 
the plaintiff grants a time extension, Suiza must divest Southern Belle 
Dairy and related assets within six (6) months after the filing of the 
proposed Final Judgment in this action or within five (5) business days 
after notice of entry of the Final Judgment, whichever is later. If 
Suiza does not divest Southern Belle Dairy and related assets within 
that period, the Court, upon plaintiff's application, is to appoint a 
trustee to sell it. The proposed Final Judgment also requires that, 
until divestiture has been accomplished, Suiza and Broughton shall take 
all steps necessary to maintain and operate Southern Belle Dairy as an 
active competitor such that the sale and marketing of its products 
shall be conducted separate from, and in competition with, all of 
Suiza's products, shall maintain sufficient management and staffing,and 
shall maintain Southern Belle Dairy in operable condition at current 
capacity configurations.
    The 60-day period to submit public comments expired on July 16, 
1999. As of the date of the filing of this Response, the United States 
had received only one public comment. This came from the Food Service 
Director of Lincoln County Public Schools in Stanford, Kentucky. 
Lincoln County is one of the 55 school districts alleged in the 
Complaint to be impacted by the proposed acquisition.

II. Plaintiff's Response to Public Comments

    The one public comment received in this matter is essentially an 
expression of gratitude to the United States Department of Justice 
staff for intervening in the proposed acquisition and for helping to 
preserve Southern Belle Dairy as an independent competitor. The 
Department staff appreciates this comment and has no other response. 
The single comment reflects the consistent concerns about the 
acquisition that the Department staff heard from many school food 
services directors during its investigation. The plaintiff also notes 
that the lack of any negative public comments indicates generally that 
there is no sector of the public likely to be dissatisfied with the 
proposed settlement.
    The Court's responsibility under the Tunney Act is to determine 
whether entry of the proposed Final Judgment is ``within the reaches of 
the public interest.'' United States v. Western Elec. Co., 993 F.2d 
1572 (D.C. Cir. 1993). After due consideration of the public comment 
received, the plaintiff concludes that entry of the proposed Final 
Judgment as written will provide an effective and appropriate remedy 
for the antitrust violation alleged in the Complaint and is therefore 
in the public interest. The plaintiff intends to move the Court to 
enter the proposed Final Judgment after the public comments and this 
Response have been published in the Federal Register, as required by 
the Tunney Act, 15 U.S.C. 16(d).

    Dated: July 29, 1999.

Respectfully submitted,
James K. Foster,
Litigation II Section, U.S. Department of Justice, 1401 H Street, NW, 
Suite 4000, Washington, DC 20530, (202) 307-0001.

By Facsimile:

Lincoln County Board of Education, 305 Danville Ave., Stanford, 
Kentucky 40104, USA.

To: U.S. Department of Justice--Antitrust
Attn: Craig Conrath

Dear Sir,
    Thank you for your intervention in the proposed merger between 
Flav-O-Rich and Southern Belle Dairy. We were concerned that we 
would have only one choice and the prices would go out of sight.
    We appreciate what you did for our food service program.
      Sincerely,
Carolyn Spangler,
Food Service Director, April 29, 1999.

Certificate of Service

    I, James K. Foster, hereby certify that, on July 29, 1999, I 
caused the foregoing document to be served on defendants Suiza Foods 
Corporation and Broughton Foods Company, by fasimile and first-class 
mail, postage pre-paid, to:

Paul Denis, Esq., Swidler Berlin Shereff Friedman, LLP, 3000 K 
Street, NW., Suite 300, Washington, DC 20007, facsimile: 202/424-
7645
William Kolasky, Esq., Wilmer, Cutler & Pickering, 2445 M Street, 
NW., Washington, DC 20037, facsimile: 202/663-6363
James K. Foster,

[FR Doc. 99-20162 Filed 8-4-99; 8:45 am]
BILLING CODE 4410-11-M