On April 3, 2017, the Antitrust Division of the U.S. Department of Justice announced that it completed its review of Danone S.A.’s acquisition of The WhiteWave Foods Company Inc. (“WhiteWave”). In order to allow the $12.5 billion acquisition to proceed, the Antitrust Division is requiring Danone to divest the Stonyfield Farms business to an independent buyer approved by the U.S. government.
Danone and WhiteWave announced their intent to merge in July 2016. The Antitrust Division filed a civil antitrust lawsuit on April 3, 2017, in the U.S. District Court for the District of Columbia to block the proposed transaction. The Antitrust Division alleged that the proposed acquisition would have reduced competition in two ways: (1) among two purchasers of raw and fluid organic milk to the detriment of dairy farmers in the Northeastern U.S. and (2) among two of the leading brands of organic milk – the WhiteWave brand and Danone’s Stonyfield Farms brand – to the detriment of U.S. consumers.
Simultaneously with filing the complaint, the Antitrust Division filed a proposed settlement that would resolve all competitive concerns by requiring Danone to divest the Stonyfield Farms business to a buyer to be approved by the Antitrust Division. The Antitrust Division stated that this divestiture would ensure continued competition among the WhiteWave and Stonyfield Farms brands.
In addition, the divestiture would ensure continued competition among purchasers of raw organic milk. Danone currently has a long-term strategic partnership and supply and licensing agreements with CROPP Cooperative, WhiteWave’s primary competitor for the purchase of raw organic milk in the northeastern U.S. The Antitrust Division alleged that the acquisition would have incentivized cooperative behavior between CROPP and WhiteWave, harming northeast farmers seeking an outlet for their raw milk supplies. In addition, the acquisition would have aligned the interests of the only three national sellers of fluid organic milk, Danone’s Stonyfield Farms brand, WhiteWave’s Horizon brand and Organic Valley (owned by CROPP). The Stonyfield Farms divestiture would sever the relationship between Danone and CROPP.
The Antitrust Division’s approval follows the European Commission’s December 2016 approval of the merger subject to different divestitures. The European Commission required Danone to divest its “growing-up milk” business in Belgium, a business that targets sales to young children.
The companies, in announcing that the Antitrust Division had signed off on the deal, said that they expected the transaction to “close promptly.” A buyer has not yet been announced for the Stonyfield Farms brand.