Laws on dairy cartel under discussion

The head of the House Judiciary Committee on Thursday asked the Bush administration how it will prevent price-fixing in the dairy industry, now that a law allowing New England states to set minimum milk prices has expired.

Wisconsin Republican James Sensenbrenner, chairman of the House panel, represents one of several midwestern states where dairy farmers bitterly oppose the Northeast Dairy Compact.

The compact, which expired on Sept. 30, was authorised by Congress in 1997 and allows New England states to set minimum milk prices for about 4,000 dairy farmers. The cartel was designed to prevent small dairy farms from going out of business.

The Bush administration has so far not taken a position on dairy compacts.

Several New England lawmakers have vowed to fight to renew the compact as part of a broad farm policy bill set for Senate debate in the next few days. But Midwestern lawmakers contend that the New England cartel encourages its farmers to overproduce, which harms farmers in other states who operate in a free market.

"I would like to know how the Antitrust Division of the Department of Justice has addressed past price-fixing and other forms of collusion in the dairy industry and what the Division may do to vigorously enforce our nation's antitrust laws and ensure these unfair practices do not occur in the future,"​ Sensenbrenner said in a letter to the Justice Department.

The Wisconsin Republican said that a recent study by Pennsylvania State University found the New England cartel had raised the consumer price of a gallon of milk by about 21 cents.

A separate study by the University of Connecticut found that the cartel boosted dairy farm income by about $128.5 million during a three-year period.

The U.S. government has regulated milk and dairy production since the 1930s with a complicated federal price support program.