A Wisconsin-based group that represents organic farmers says it’s won a U.S. Department of Justice victory against Danone, the France-based maker of Dannon yogurt, regarding competition in the American yogurt market.
The Cornucopia Institute says it argued that Danone should liquidate its holdings in the Stonyfield Farms organic yogurt brand as a condition of Danone’s proposed $12.5 billion acquisition of WhiteWave Foods.
The Justice Department agreed and said it would approve the WhiteWave deal if Stonyfield were sold to an independent buyer.
The sale will help ensure competitive marketplaces for farmers that sell organic milk and consumers who purchase it nationwide, the Justice Department said in a statement.
Cornucopia challenged the WhiteWave acquisition through the anti-trust division of the Justice Department.
“I think we presented some pretty compelling testimony on the possible ramifications of this deal. I am refreshingly surprised that the Department of Justice took this aggressive action,” said Mark Kastel, Cornucopia’s co-founder.
Danone is a global food company that had $24.3 billion in sales in fiscal 2015. Stonyfield Farms, a Danone subsidiary, is one of the nation’s largest organic yogurt makers.
Cornucopia, a nonprofit, says it urged the Justice Department to investigate the impact of a combined Danone and WhiteWave on organics.
Dairy is one of the most commercially successful product categories in organics, according to Cornucopia.
If Danone acquired WhiteWave, without divesting Stonyfield, it would reduce choices and raise prices for consumers, without any positive impact on the quality of products they’re buying, Kastel said.
“With less competition, big companies commonly underpay independent farmers for their products, undermining the economic vitality of small, family-scale farms. The organic community was wise to be very wary of this acquisition,” Kastel said.
The original deal would have combined Stonyfield, the world’s largest organic brand, with Wallaby, a rapidly growing organic yogurt label, and Horizon, the nation’s largest brand of organic milk.
With the Stonyfield issue settled, Danone said it expects to complete the WhiteWave acquisition this month.
“As part of the agreement in principle with DOJ, we made the strategic decision to divest Stonyfield, as it allows us to take a major step towards completing the WhiteWave transition expeditiously,” Danone said in a statement.