Halifax-based SaaS startup Milk Moovement, which develops supply chain solutions for milk producers, is in an active legal dispute with a United States (US) competitor, Dairy LLC (operating as Ever.Ag), surrounding antitrust violations.
On January 13, Milk Moovement filed a counter lawsuit against Dairy alleging that Dairy has abused its monopoly power by eliminating competition in the dairy intelligence space through de facto exclusive client contracts and acquisitions.
In this countersuit, Milk Moovement is asking the court to award the startup compensatory and punitive damages. Dairy had initially sued Milk Moovement in December 2021, claiming that Milk Moovement had misappropriated the former’s “trade secrets.”
Milk Moovement believes Dairy was about to implement an “acquire and kill strategy” on the Halifax startup.
In a statement shared with BetaKit, Milk Moovement said: “These counterclaims seek to break Dairy’s stranglehold on competition, open the market to everyone, provide choices within the industry, and lower the price of milk. That’s how the free market is supposed to work.”
Founded in 2018, Milk Moovement manages over 30 billion pounds of raw milk each year through its supply chain software. The startup said this amounts to about 15 percent of the US dairy market. Milk Moovement’s customers include the United Dairymen of Arizona and California Dairies Inc. (CDI).
Based in Texas, Dairy operates Dairy.com, now Ever.Ag after it acquired Ever.Ag in 2021. Like Milk Moovement, Dairy specializes in developing software for the milk supply chain. Led by CEO Scott Sextion, Dairy is partially owned by Banneker Partners, a private-equity firm based in San Francisco, California.
Dairy contends in its lawsuit that in September 2021, one of Milk Moovement’s representatives had reached out to CDI, a Dairy client at the time, to request over 20 reports from Dairy’s supply chain software. Dairy alleges that CDI agreed to the request, compromising a “large portion” of its software suite, according to the company.
“Although Dairy has obtained a single email demonstrating that CDI shared a broad range of reports from Dairy’s software with Milk Moovement, it has no way of knowing what other information was shared and whether CDI demonstrated other proprietary aspects of Dairy’s software that contain trade secrets for Milk Moovement,” Dairy’s February 2022 filing states.
In its countersuit, Milk Moovement is alleging that the reports that Dairy defined as “trade secrets” are similar to the reports containing client data that Milk Moovement has been providing to its clients since Milk Moovement was founded.
“These are standard forms, similar to those used by others in the industry,” Milk Moovement’s most recent court filing reads. “These reports and the client data reflected in them are often provided to third parties.”
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Milk Moovement also claims that Dairy has committed antitrust violations to throttle competition and raise prices for American consumers. On its website, Dairy claims over 80 percent of the largest dairy companies in the country as its clients.
To maintain this “monopoly,” as Milk Moovement described, it alleged that Dairy “forces” customers into agreements wherein clients’ raw data and information are subject to “oppressive confidentiality restrictions” that preclude data sharing with other parties. “The purpose and result is to prevent them from acquiring data services from anyone other than Dairy,” wrote Milk Moovement in its January 2023 counter lawsuit.
Additionally, Milk Moovement claims Dairy actively purchases competitors or potential competitors with the intent to shut them down. An example listed in Milk Moovement’s counter lawsuit is Dairy’s purchase of a software system developed by the United Dairymen of Arizona. Milk Moovement said that Dairy never brought that software to market, “effectively terminating a competitor.”
Milk Moovement said that it received multiple emails in 2020 from Banneker to set up a meeting about the Halifax startup’s “interesting overlaps” with Dairy. Milk Moovement alleges that Bannker arranged the meeting with Milk Moovement to “determine whether Milk Moovement posed a threat to Dairy’s market share and, if so, eliminate that threat through a strategic acquisition.”
Milk Moovement filed for an initial counterclaim in April 2022, alleging similar claims that Dairy’s lawsuit against Milk Moovement is part of an anticompetitive scheme. The US District Court for the Eastern District of California dismissed Milk Moovement’s bid, finding that Dairy’s case wasn’t “objectively baseless.”
Featured image from Unsplash.