- The Cornucopia Institute, an organic industry watchdog group, believes the proposed Danone-WhiteWave takeover is anti-competitive and threatens the U.S. organic dairy market, according to a complaint the group filed with the Department of Justice and the Federal Trade Commission.
- The pending WhiteWave takeover would give Danone control over a larger share of the U.S. organic dairy market than any single company has ever had before, as Danone's Stonyfield would sit alongside WhiteWave's Horizon and Wallaby brands.
- "With this acquisition we are concerned that Danone will easily be able to beat out any competition by lowering prices beyond what farmstead dairies, and more moderate size milk processors and marketers, can withstand," Marie Burcham, a livestock policy analyst and attorney with The Cornucopia Institute, who signed the complaint letters, said in a statement.
While such antitrust concerns didn't sound many alarms when the takeover deal was first announced, Cornucopia's concerns aren't unfounded. The organic dairy market is small with relatively few players, which makes it more susceptible to a monopoly.
"If, after its acquisition, Danone decides to dump Organic Valley, a Horizon competitor, as a supplier, it could leave only one major purchaser of organic farm milk in some regions of the U.S.," according to a news release.
If Danone controls a significant portion of that market, it could manipulate prices to undercut competitors' prices and put them out of business, according to Cornucopia. With less competition, Danone could then raise prices for consumers, who would have fewer options.
If these antitrust concerns, along with Cornucopia's petition for a federal investigation into the proposed merger, grab regulators' attention, Danone may have to consider concessions. Anheuser-Busch InBev and SABMiller made significant concessions to gain final approval for their merger in various markets, such as selling off SABMiller's stakes in joint ventures like MillerCoors in the U.S. and CR Snow in China, in addition to other SABMiller brands in Europe.
Any concessions by Danone would likely concentrate on the U.S., but it's unclear whether Danone would be willing to sell off Stonyfield Farms, its own organic yogurt maker.