Review of Industrial Organization 17: 343–353, 2000.
© 2000 Kluwer Academic Publishers. Printed in the Netherlands.
Great School Milk Conspiracies Revisited:
ROBERT F. LANZILLOTTI
Department of Economics, University of Florida, Gainesville, Florida 32611, U.S.A.
Abstract. A re-examination and analysis of data in court records covering sealed-bidding practices,
market shares, incumbency rates, and proﬁt margins of two dairies charged with bid-rigging disclose
that Scott’s analysis is ﬂawed in several important respects: reliance on selective bid data, omission
of relevant bid data, and errors in reported bids. Accordingly, Scott’s hypothesis (that two dairies
may have been engaged in tacit collusion instead of overt collusion) was found to be based largely
on conjectures, not hard data, and thus should be rejected.
Key words: Bid-rigging, collusion, market sharing, school milk contracts, sealed bidding.
Prosecutions of antitrust complaints oftentimes are hampered by limited statistical
data, but in the school milk bid-rigging litigation, extensive bid price data and con-
tract awards were maintained by the school districts, and are part of court records in
Kentucky and elsewhere. However, Scott’s analysis reveals either a limited famili-
arity with the data in the milk case he singled out for review, a calculated selection
of data used to support his hypothesis that (“. . . the two dairies may have been
engaged in tacit collusion instead of overt collusion”), or outright carelessness.
Contrary to the title, the paper examines only one of many conspiracies analyzed
in my 1996 article in the Review,
presenting an analysis that is so badly ﬂawed
that it borders on an apologia for Trauth Dairy’s actions.
II. Scott’s Market Share Analysis
Scottargues thatsince Trauthand Meyer’smarketshares “...variedconsiderably
(over) a longer time period (1978–1993) ...”nobid-rigging existed. Such variation
in market shares can be found if one includes the years preceding the conspiracy
However, the central question begged by Scott’s Table 1 is:
See Lanzillotti (1996).
My article identiﬁes the conspiracy period as 1984–1988 (ibid., p. 431), but Scott engages in
a little poetic license, declaring ex cathedra that the conspiracy period also included 1978–1982,
with a vague reference to testimony of two principals involved in the conspiracy “who reportedly