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PREATE CHARGES BID-RIGGING ON MILK PACT FOR PHILADELPHIA SCHOOLS

 PREATE CHARGES BID-RIGGING ON MILK PACT FOR PHILADELPHIA SCHOOLS
 HARRISBURG, Pa., Nov. 26 /PRNewswire/ -- Attorney General Ernie Preate Jr. today sued two Bucks County dairies, charging they rigged bids on a multi-million-dollar contract to provide milk for school children in Philadelphia.
 Preate said his office is seeking damages -- which could approach $2 million or more -- from Balford Farms, 3041 Marwin Ave., Bensalem, Pa., and Spring Valley Farms, Inc., 1730 Stout Drive, Unit 4, Warwick, Pa.
 The civil antitrust suit was filed in U.S. District Court by Preate's Antitrust Section on behalf of the School District of Philadelphia. The case developed from a bid-monitoring program for Pennsylvania school districts initiated in 1989 by the Office of Attorney General in cooperation with the Pennsylvania Department of Education, Preate said.
 "We allege that Balford Farms persuaded Spring Valley Farms to submit an intentionally uncompetitive bid to insure that Balford would receive the Philadelphia school milk contract in 1986," said Preate. "Balford allegedly solicited the false bid to avoid being the lone bidder, a circumstance it feared might cause the school district to re-bid the contract."
 Preate characterized the school district as "the innocent victim, deceived into believing Balford's price was competitive."
 Since the school district extended the $2.5 million contract with Balford for the next two years without new bids, the antitrust complaint covers the 1986-87, 1987-88 and 1988-89 school years.
 "These companies have cheated an urban school district, whose needs are great and whose resources are limited, out of hundreds of thousands of dollars in taxpayers' money," said Preate. "That makes this alleged bid-rigging scheme doubly offensive."
 The Attorney General said the exact amount of damages sought will be determined when his office obtains additional records from the defendants and others.
 However, a preliminary estimate indicates that the school district suffered damages of at least $200,000 in each of the three years the contract was in force, according to the suit. Because damages could be trebled under the antitrust laws, the school district may be entitled to damages totaling $2 million or more, Preate said.
 Balford won the contract for 1986-87 with a low bid of 14.79 cents per half pint of low-fat chocolate milk and 14.45 cents per half pint of whole white milk. Balford had won the Philadelphia schools' milk contract in 1985 with substantially lower prices -- 13.2 cents per half pint of low-fat chocolate milk and 13.8 cents per half pint of whole white milk.
 According to investigators, the 1986 bids were 20 per cent higher than the bids of about 12 cents per half pint which won contracts in other school districts in the Philadelphia area that year. In addition, investigators said the state Milk Marketing Board's minimum prices for whole white milk went down between 1985 and 1986.
 Preate said his office's investigation indicates the $200,000 figure is "a conservative estimate of the annual loss." He noted that, for example, had the school district been able to award a contract in the 12-cent range being paid by surrounding districts, the saving for 1986 alone would have been $420,000.
 The Attorney General said the bid-monitoring program established in 1989 by his office and the Department of Education was funded by the Federal Trade Commission with monies received through a settlement of price-fixing charges against manufacturers of school art materials.
 Milk was one of the products initially selected for the bid- monitoring program in Pennsylvania, Preate said.
 Based on a preliminary analysis of milk price data, Preate's Antitrust Section subpoenaed the records of 10 dairies, nine of them in Philadelphia and four surrounding counties, according to Preate. He said the subpoenas were issued under the state Anti-Bidrigging Act.
 One of the subpoenas prompted a tip that helped produce evidence of the alleged rigging of Balford Farm's 1986 bid, Preate said.
 In addition to damages allowed under federal antitrust law, the suit also seeks civil penalties from each defendant under the state Anti- Bidrigging Act. The act permits penalties of up to $100,000.
 Assistant Chief Deputy Attorney General Carl S. Hisiro of Preate's Antitrust Section is prosecuting the case.
 /delval/
 -0- 11/26/91
 /CONTACT: Robert R. Gentzel of the Office of Attorney General, 717-787-5211, or, home, 717-774-4325 CO: Office of Attorney General ST: Pennsylvania IN: SU:


JS -- PH021 -- 7434 11/26/91 15:30 EST
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Publication:PR Newswire
Date:Nov 26, 1991
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