Book Review: Public Policy Toward Mergers in the Dairy Processing Industry

• Author: Corwin D. Edwards
• Published date: 01 December 1977
• Date: 01 December 1977
• DOI: http://doi.org/10.1177/0003603X7702200414
• Subject Matter: Book Reviews

Willard F. Mueller,

Larry

G. Hamm, and Hugh L. Cook,

Public Policy Toward Mergers in the Dairy Processing

Industry,Madison, Wise.: Research Division, College of

Agriculture, University of Wisconsin (1976), 120 pp.

This is the third of a series of monographs concerned with

the organization and control of the food system of the United

States. These

are

being produced by a group composed of 20

persons from agricultural experiment stations in 17 states

and ten persons from the U.S. Department of Agriculture.

The topic of this excellent study is the impact upon the

strncture of the fluid milk industry of proceedings by the

Federal Trade Commission against mergers in

that

industry.

The proceedings upon which the study focusses were begun

in 1956 against the four largest fluid milk produeers-s-Na-

tional Dairy, Borden, Foremost Dairies, and Beatrice Foods

-each

of which had grown very rapidly and had engaged in

numerous mergers. The first two cases resulted in consent

decrees, the other two in decisions against the companies.

In each instance, some of the challenged acquisitions were

divested by order, and future mergers without

prior

consent

by the Commission were forbidden for the next ten years.

In

the Beatrice decision the Commission stated criteria

that

it intended to use in challenging future fluid milk

mergers. Recognizing

that

dairies too small to be efficient in

the industry's widening markets were not important sources

of potential competition, these criteria condemned acquisi-

tions of "not insubstantial" dairies by

any

of the industry's

giants;

treated as harmless or desirable mergers by medium-

sized companies

that

were not

parts

of an effort to

attain

giant size and

that

did not eliminate asignificant competitor

in the same

market;

and treated as harmless all mergers by

dairies too small to achieve economies of scale.

The study traces, in statistical detail, the impact of this

policy upon subsequent growth and subsequent mergers by

dairy

companies of different sizes.

It

also attempts by re-

931