Milk in New England. Dairy farming and processing has become much more concentrated in New England. The latest proposed merger between the two biggest milk players (the Dallas firm distributes to all Stop+Shop as well as several other big supermarkets): "Hood Plans to Merge with Dallas Dairy Firm". Not surprisingly, milk prices have risen considerably and are much higher than other parts of the country.
Nonetheless, Hood is suing a small player (Midland) for charging prices below marginal cost. See "Economists Find High Markup of Regional Milk Prices". Apparently the story is a bit more complex than I described in class. The suit is brought under an old Massachusetts law that prohibits below-MC pricing in dairy. But as Midland rightly argues, this law is outdated: it assumed a competitive landscape and was aimed at averting monopolization. Now it is being misused by firms with market power to maintain their market power. There is no chance that by charging less than MC this dairy might hope to gain market power, so no federal case could be brought here. I hope they get this right: modify the law and account for this sort of anti-competitive litigation in the review of the Hood merger!
[Categories: Other (Antitrust)]
10:44:32 AM 
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