CHICAGO (CN) – The Dairy Farmers of America fixed wholesale prices of processed cheese and milk products by “‘cornering the market’ for the spot price of cheese” on the Chicago Mercantile Exchange, according to a class action antitrust complaint in Federal Court. Plaintiffs claim “this market manipulation scheme was the subject of a recent [Dec. 16] $12 million fine and order issued by the Commodity Futures Trading Commission.”
The defendant is the largest dairy cooperative in the world, with more than 18,000 members in 48 states. Lead plaintiff Adam Properties, a dairy processor and distributor based in Oceanside, Calif., also sued DFA’s former CEO Gary Hanman.
Adam claims DFA “intentionally and unlawfully intervened in the Chicago Mercantile Exchange to purchase inordinate amounts of cheese for the purpose of ‘cornering the market’ for the spot price of cheese and thereby manipulating and raising the price of processed cheese and the directly correlated price of processed milk.
“These purchases of cheese on the Exchange were executed by defendants, or their agents, in spite of the fact that, in many instances, they were aware that they may have to dump the purchased cheese at a loss. Nonetheless, defendants engaged in the transactions because they knew that through their price manipulation scheme they would cover their losses and extract supracompetitive profits on their related sales of processed cheese and processed milk sold off of the Exchange,” the complaint states.
Plaintiff seeks class certification and treble damages. It is represented by Kenneth Wexler with Wexler Wallace.