STATE SUES DAIRIES OVER BID-RIGGING

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, April 13, 1993                   TAG: 9304130285
SECTION: VIRGINIA                    PAGE: C-1   EDITION: METRO 
SOURCE: RON BROWN STAFF WRITER
DATELINE:                                 LENGTH: Medium
STATE SUES DAIRIES OVER BID-RIGGING
State officials, soured on bid-rigging dairies, filed suit against Meadow Gold and Valley Rich Monday alleging they fixed the price of milk in 10 Southwest Virginia school districts.
The action initiated by Attorney General Stephen D. Rosenthal comes on the heels of a federal criminal action against the two dairies, which agreed this past summer to pay $1.5 million in fines in connection with federal bid-rigging allegations.
Borden Inc., the parent company of Meadow Gold, agreed to pay $1 million in federal fines this past summer. Valley Rich agreed to pay $500,000 in fines.
The state is seeking $100,000 civil penalties from each dairy for those alleged violations of the state antitrust act, said Rosenthal spokesman David Parsons.
The 10 school districts allegedly affected by the bid rigging include Alleghany, Botetourt, Franklin, Giles, Patrick and Roanoke counties and the cities of Covington, Radford, Roanoke and Salem.
The lawsuit against Meadow Gold and Valley Rich in U.S. District Court in Roanoke also alleges that the dairies fixed prices on milk sold to nongovernmental wholesale customers - primarily grocery stores and convenience stores - in Southwest Virginia.
An earlier suit against five Eastern Virginia dairies resulted in the recovery of $1.7 million for 35 school districts.
"Schools today have enormous challenges facing them and some of these school systems are already severely disadvantaged in terms of resources available for students," Rosenthal said. "I simply cannot think of a more vulnerable population to be taken advantage of."
According to court records, representatives of Meadow Gold and Valley Rich discussed among themselves the submission of prospective bids to the school systems and who would submit the low bid.
The other company then would refrain from bidding or submit an intentionally high bid.
The representatives of the milk companies agreed upon and adjusted their prices in response to changes in their cost of buying, processing and distributing milk and other dairy products, court records show.
In separate plea agreements, Valley Rich and Borden agreed to cooperate with any further grand jury investigation.

by Bhavesh Jinadra by CNB