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Attachment C

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NAIC Staff on "Monitoring Competition (May 1974), at 58.

APPENDIX 4

MILK MARKETING

A REPORT OF THE

U.S. DEPARTMENT OF JUSTICE

TO THE

TASK GROUP

ON ANTITRUST IMMUNITIES

JANUARY 197

PROJECT STAFF

The Report was prepared in the Department of Justice during the tenures of Assistant Attorneys General Thomas E. Kauper and Donald I. Baker by Antitrust Division staff Roger W. Fones, Esq., Janet C. Hall, Esq., and Robert T. Masson, Ph.D., subject to the immediate supervision of Donald L. Flexner, Acting Chief of the Division's Regulated Industries Section and the overall guidance of Jonathan C. Rose, Deputy Assistant Attorney General. Also contributing to the preparation and analysis of the Report were A. Theodore Gardiner III and Vicki Golden, attorneys in the Antitrust Division.

PREFACE

Spokesmen for the dairy industry are often heard to complain that the dairy industry is "over-studied", and unnecessarily so. It is true that many analysts and study commissions have within the past decade addressed themselves to facets of milk marketing and government involvement therein. There have also been

various studies and reports on the role and impact of cooperatives upon milk marketing.

The question might then arise as to the reason and need for this report. As part of a broad administration effort to evaluate and reform government regulation of business, the Antitrust Immunities Task Force was created to study the competitive implications of regulation which created exemptions from the antitrust laws. In November, 1975, the Task Force, which was at that time chaired by Thomas E. Kauper, the then Assistant Attorney General in charge of the Antitrust Division of the Department of Justice, directed the staff to prepare a report on the effects of governmental regulation of the dairy industry.

The study was undertaken immediately. Substantial information was gathered from numerous. sources, including

Trade Commission, industry participants 1/ and other

interested parties.

There are compelling reasons for this report, in some respects obvious and in others not. Dairy products, and particularly fluid milk, constitute a significant portion of the American diet. Any one product of such significance, both to health and commerce, in American life is a natural subject for scrutiny. When the marketing of that product is highly regulated, contrary to the traditional principles of our free market economy, constant review of the effectiveness and continued necessity of government regulation is the natural function of a responsible government, and a welcomed activity of independent groups. Thus, the need for continued study of milk marketing should be obvious.

The need for this particular study is perhaps less obvious, but no less significant. Most of the recent studies of either federal regulation of the dairy industry or cooperatives have focused on a particular problem

In an effort to obtain a better understanding of the operation and performance of cooperatives, a questionnaire was issued by the staff to 90 selected cooperatives and 16 selected federations. The responses to the questionnaire were quite helpful in our understanding of the role cooperatives play and the staff would like to thank those

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