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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION UNITED STATES OF AMERICA, et al., REDACTED VERSION ‘Confidential Information Plaintiffs, Redacted y, Civil Action No.: 6:03-206-KSF DAIRY FARMERS OF AMERICA, INC., et al., Defendant a | PLAINTIFFS’ MEMORANDUM IN SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT ON DFA’S “CONTROL” AFFIRMATIVE DEFENSE TABLE OF CONTENTS Table of Authorities ....... Introduction . . Overview of the Argument . Argument .......0 25 I. Anacquisition violates Section 7 when it poses a reasonable probability of increasing cooperation or coordination among competitors in the market. . UA vali defene must overeome the presumption agains joining partes toabid-rigging scheme ........ VL vu. Conclusion ... Section 7 by its express ems applies to partial aequistions, and no showing of “control” is required ......... a The defense fails because the transaction gives DFA an incentive and opportunity to reduce competition between Southern Belle and NDH, and because Southem Belle now has a greater incentive to avoid competing against NDH, another DFA dairy .... 14 Cooperation short of bid rigging and even express collusion are made more likely because DFA’s hand-picked partners are highly unlikely to. compet against cach other and cause financial losses to both themselves and DFA... a Any defense to a merger to monopoly (or duopoly) must be extraordinary The testimony by defendants’ executives promising to compete and disclaiming any intent to exercise market power is legally irrelevant ............ ii TABLE OF AUTHORITIES Cases Page A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396 (7th Cir. 1989) ..........21 Arthur S, Langenderfer, Inc. v. 8.E. Johnson Co., 729 F.2d 1050 (6th Cir. 1984) .......2...17 Briggs Mfrg. Co. v. Crane Co., 185 F. Supp. 177 (E.D. Mich. 1960) .....2...+ees0++++2223 Brown Shoe Co. v. United States, 370 U.S. 294 (1962) .. California v. American Stores Co., 495 U.S. 271 (1990) - Community Publishers Inc. v. Donrey Corp., 892 F. Supp. 1146 (W.D. Ark. 1995) . Crane Co. v. Briggs Mfg. Co., 280 F.2d 747 (6th Cir. 1960) ... Denver & Rio Grande West R.R. v. United States, 387 U.S. 485 (1967) F&M Schaefer Corp. v. C. Schmidt & Sons, 597 F.2d 814 (2d Cir. 1979) .. FIC v, Elders Grain, 868 F.2d 901 (7th Cir. 1989) eqp0008 5,6,8 FIC v, Indiana Federation of Dentists, 416 U.S. 447 (1986) ......+.-.+++ FIC v. HJ. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) 0.0.62... 0000eeee es FIC v. PPG Indus., 798 F.2d 1500 (D.C. Cir. 1986) ... 6 Gulf & Western Indus., Inc. v. Great A&P Tea Co., 476 F.2d 687 (2d Cir. 1973) Hamilton Watch Co. v. Benrus Watch Co., 114 ¥. Supp. 307 (D. Conn. 1953) .. 13 Hospital Corp. of America v. FTC, 807 F.2d 1381 (7th Cir. 1986) ... - 4,6,7,17,21 Levine v. Central Florida Medical Affiliates, Inc., 72 F.3d 1538 (11th Cir. 1996) . . 221 Matsushita Elec. Indus. Co., Ltd. y. Zenith Radio Corp., 475 U.S. 574 (1986) ...-...2.+++-24 Metro-Goldwyn-Mayer, Inc. v. Transamerica Corp., 303 F. Supp. 1344 (S.D.N.Y. 1969) .... 13 2B Navajo Terminals, Inc. v. United States, 620 F.2d 594 (7th Cir. 1979) .