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Published 7:00 am Thursday, November 24, 2022
The cranberry market is dominated by a single cooperative: Ocean Spray, whose 700 farmer-owners in North America and Chile produce about 65% of the global cranberry supply.
Though the power exerted by Ocean Spray may inspire reverence, it’s also stirred accusations of market manipulation. The cooperative refused to respond to questions about its role in the cranberry industry.
A decade ago, a group of independent farmers and cooperative members filed a lawsuit claiming that Ocean Spray had unlawfully discriminated against certain growers, violated federal antitrust law and breached a 1957 court judgment that barred monopolistic practices in cranberry production.
The complaint alleged that only some farmers shared in the proceeds of Ocean Spray’s branded products, while others were relegated to a lower class that received lesser returns only from the sale of commodity cranberry concentrate.
The plaintiffs further claimed that Ocean Spray devised an auction meant to depress prices for cranberry concentrate across the industry.
“Everybody looked to that auction to determine what should be the price of concentrate,” said Peter Carstensen, an agricultural antitrust law professor at the University of Wisconsin who followed the litigation.
Ocean Spray intended to discourage its members from selling to independent processors, who couldn’t afford to pay more for cranberries and still compete with Ocean Spray, the complaint said.
Ocean Spray countered that the quarterly auctions improved certainty and market transparency: The mechanism assured the cooperative of a certain sales volume while showing customers they were all treated fairly.
The plaintiffs argued starting prices were set artificially low to depress the market, but Ocean Spray claimed these bids were intended to maximize the number of competitors without affecting the ultimate price.
The lawsuit was dealt several setbacks when a federal judge dismissed some of the charges and refused to certify it as a class action, which would have allowed numerous other growers to join the case.
However, the plaintiffs were collectively allowed to proceed with their claims as a group.
Along the way, Ocean Spray stopped holding the auction in 2018, though it’s unknown whether the litigation influenced that decision, Carstensen said. “It certainly got a lot of bad publicity from the lawsuit.”
The lawsuit later went to mediation, with the case getting dismissed a year ago after the parties struck a confidential settlement deal.
While the agreement is secret, a dispute among law firms may have shed some light on its financial terms.
Former attorneys for the farmers sought arbitration to recover a share of the money allegedly obtained by the plaintiffs.
In court documents, they claimed that, “on information and belief, the settlement exceeds $20 million and may be in the range of $30 million to $40 million.”
In the original complaint, the plaintiffs said they’d suffered $620 million in damages and demanded three times that amount in compensation.
Growers involved in the litigation are said to be pleased with its outcome, but legal questions about Ocean Spray’s tactics went unresolved, Carstensen said. “Since the case never went to trial, we never got a ruling on whether there were legitimate business reasons.”