The U.S. Department of Justice Monday approved Danone's  $12.5 billion acquisition of WhiteWave Foods  (WWAV) , contingent upon Danone divesting its Stonyfield Farms business to an independent buyer.

The DOJ said that without the divestiture the proposed acquisition likely would reduce competition between the two leading participants in the markets for organic milk, potentially harming dairy farmers in the Northeast and U.S. consumers of organic milk.

Danone announced its divestiture offer to the DOJ last week.

"The proposed acquisition would have blunted competition between the top two purchasers of raw organic milk in the northeast and the producers of the three leading brands of organic milk in the United States," said Acting Assistant Attorney General Brent Snyder of the Justice Department's Antitrust Division. The divestiture of Stonyfield "will ensure competitive marketplaces for both farmers in the northeast that sell raw organic milk and consumers who purchase fluid organic milk in stores nationwide."

According to the department's complaint, as a result of France-based Danone's long-term strategic partnership and supply and licensing agreements with WhiteWave's primary competitor in the purchase of raw organic milk from dairy farmers, CROPP Cooperative, the proposed acquisition would have provided incentives and opportunities for cooperative behavior between the two leading purchasers of raw organic milk in the Northeast. Such cooperation likely would have resulted in farmers receiving less favorable contract terms for the purchase of their raw organic milk, the DOJ said.

Consumers of packaged fluid milk similarly would have risked higher prices and fewer choices due to the aligned the interests of the producers of Stonyfield, Horizon and Organic Valley, the only three national fluid organic milk brands.

In explaining the Stonyfield Farms divestiture, the DOJ said that the sale will sever Danone's and CROPP's strategic partnership and will eliminate any entanglements between CROPP and the merged firm.

Danone is a global food conglomerate with annual sales of roughly $24.3 billion. Stonyfield Farms is headquartered in Londonderry, N.H., and sells a range of organic dairy products. WhiteWave is headquartered in Denver and also produces and sells a range of organic dairy products, including organic fluid milk, yogurt and cheese. It had $3.86 billion in sales in 2015.

The plans to acquire WhiteWave were announced in July.

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