The €394m deal by Dairy Farmers of America (DFA) to acquire the troubled Dean Foods business is once again at risk of going sour. The initial move by DFA was subject to US Department of Justice (DoJ) scrutiny, because of the scale of the acquisition. DFA, a farmer owned co-operative, is already the largest milk processor in the US and acquiring Dean Foods will further enhance that position.

On 1 May it was announced that a deal between DFA, Dean Foods and the DoJ was reached, which required DFA agreeing not to purchase three of the 44 Dean Foods milk plants they had originally agreed to purchase. These plants are located in Illinois, Massachusetts and Wisconsin.

Soon afterwards, another lawsuit against the takeover was filed, this time by grocery retailer Food Lion and the Maryland and Virginia Milk Producers Co-Operative. They claim that the deal will reduce competition and ultimately the price of milk for farmers and it will also reduce competition for milk supply to retailers.

While it is unlikely that this lawsuit will jeopardise the deal, as it has already been approved by the DoJ, it’s likely to slow down the transaction and lead to further uncertainty for those connected with Dean Foods. Separately, the US market for Class III milk has recovered to pre-COVID levels. The dumping of milk seems to have ceased, with processors regaining capacity to process all milk produced.