Schreiber Foods escapes CME milk price fixing lawsuit


- Last updated on GMT

Schreiber Foods escapes CME milk price fixing lawsuit

Related tags Milk Plaintiff

US cheese giant Schreiber Foods has escaped an antitrust lawsuit that alleged it conspired with Dairy Farmers of America (DFA) to drive up the price of Class III milk.

Granting a summary judgment in favor of Schreiber Foods at the US District Court for the Northern District of Illinois Eastern Division earlier this week, Judge Robert Dow concluded there was "insufficient"​ evidence it conspired with DFA to manipulate the price of Class III milk, which is used primarily in cheese making.

Wisconsin-based Schreiber Foods was accused of colluding with DFA in 2004 to purchase cheddar cheese traded on the Chicago Mercantile Exchange (CME) to help DFA and its subsidiary Keller’s Creamery manipulate the price of Class III milk futures.

In an 83-page order, Judge Dow concluded, however, that the evidence offered by the plaintiffs against Schreiber Foods was “insufficient to lead a reasonable jury to conclude that they engaged in a risky, illegal conspiracy to manipulate the price of milk futures.”

“Plaintiffs have failed to demonstrate that Schreiber had the specific intent to manipulate milk futures, and summary judgment on Plaintiffs’ Commodity Exchange Act (CEA) claim is appropriate,”​ he said. approached Schreiber Foods for comment but no reply was forthcoming prior to publication.

"Independent business interests"

The plaintiffs - cheese distributor Indriolo Distributors, Class III milk futures trade Knutsons, and raw milk purchaser Valley Gold - initially sued DFA, Keller's Creamery, and a number of executives from the two businesses. 

Schreiber Foods was added to the class action complaint as a defendant in March 2012.

It was accused alongside DFA of purchasing cheese on the CME cheese spot market to stabilize prices while DFA and Keller's Creamery disposed of their Class III milk futures positions at a profit.

The CME cheese spot market is not a major source of cheese in the US, representing less than 2% of the national supply. Price movement in the CME cheese spot market do, however, help determine the broader value of dairy products sold in the US.

It was alleged that Schreiber and DFA then stopped buying cheese - a move that caused cheese prices to crash.

Schreiber Foods argued that its purchasing activity “was not unusual, was not parallel to DFA’s activity, did not begin May 24, and is fully explained by Schreiber’s independent business interests in preventing a large spread between block and barrel prices from eroding Schreiber’s profit margin.”

Granting a summary judgment in favour of Schreiber, Judge Dow said the plaintiffs had failed to produce any evidence that Schreiber agreed to join the alleged conspiracy or that its conduct was inconsistent with its independent business interests.

Related topics Manufacturers Cheese

Related news