UPDATE: TreeHouse Foods Sues Green Mountain Coffee and Keurig for Anticompetitive Conduct; Lawsuit Seeks to Preserve Consumer Choice and Price Competition in K-Cup Market
TreeHouse Foods, Inc., (NYSE: THS) and two wholly-owned subsidiaries, Bay Valley Foods, LLC, and Sturm Foods, Inc., today filed suit against Green Mountain Coffee Roasters (NASDAQ: GMCR), Inc. and Keurig, Inc., accusing them of anticompetitive acts to unlawfully maintain a monopoly over the cups used in single-serve brewers.
In its complaint, filed in the United States District Court for the Southern District of New York, TreeHouse asserts claims against Green Mountain for violation of federal antitrust laws, and state antitrust and unfair competition statutes and common law of the states of New York, Wisconsin and Illinois.
More specifically, the plaintiffs assert that various exclusionary agreements between Green Mountain and various suppliers and distributors are designed to maintain Green Mountain's monopoly power in the cup market after the expiration of Green Mountain's cup patents. Further, Green Mountain has announced that its Keurig 2.0 brewer, to be launched later this year, will contain an anticompetitive lock-out technology that will prevent the Keurig 2.0 brewers from functioning with cups supplied by unlicensed competitors. TreeHouse asserts that these actions are an attempt to eliminate consumer choice and to coerce Keurig 2.0 brewer owners into purchasing only Green Mountain owned or licensed K-cups. In addition, Green Mountain has announced plans to eliminate the current lineup of K-cup brewers, which function with competitive cups, to exclude competition and force consumers to purchase higher-priced Green Mountain cups. TreeHouse's lawsuit maintains that any supposed consumer benefits from the new technology are more than outweighed by the harm to competition and consumers by eliminating their choice and forcing them to pay higher prices for Green Mountain cups.
Sam K. Reed, Chairman, President and Chief Executive Officer for TreeHouse Foods, said, "We reluctantly brought this lawsuit not just for ourselves, but for consumers and other companies that similarly encounter anticompetitive practices that violate the law. We are seeking free and open competition on the merits to bring our customers high quality and innovative products at better prices. A favorable ruling for TreeHouse and our subsidiary businesses will prove beneficial to the entire spectrum of consumers, retailers and suppliers."
"Since entering the market, we have been instrumental in the growth of the single-serve coffee market," Reed continued. "Our introduction of retailer private brands has resulted in greater focus on category management, and has led to better pricing, expanded assortment and increased promotional programs, all of which have driven category growth in a meaningful way. We are firm believers in price competition, flavor innovation, product improvements and product engineering to compete and to develop products for use by Keurig machine owners of all formats."
Leading the antitrust legal team for the plaintiffs are Dan K. Webb and Aldo A. Badini of Winston & Strawn. Mr. Webb, who serves as Winston's firm chairman, has tried more than 100 jury cases, including jury trials resulting in many successful verdicts. Mr. Webb has been widely recognized as one of the nation's leading trial lawyers, with accolades such as "the top litigation expert in the United States," a "star" in antitrust litigation, and one of the "top ten lawyers for the last ten years." Mr. Badini is a litigation partner with 30 years' experience litigating antitrust cases, including as lead trial counsel, and specializes in antitrust issues involving intellectual property.
A copy of the full complaint, TreeHouse Foods, Inc., Bay Valley Foods, LLC, and Sturm Foods, Inc., Plaintiffs, versus Green Mountain Coffee Roasters, Inc. and Keurig, Incorporated, Defendants, Case No. 14-cv-0905 (VSB), is available at http://psiclientweb.com/treehouse/TreeHouse-v-GreenMountain.pdf.
ABOUT TREEHOUSE FOODS
TreeHouse is a food manufacturer servicing primarily the retail grocery and foodservice channels. In addition to single serve hot beverages, its product lines include non-dairy powdered creamer; condensed, ready to serve and powdered soups; refrigerated and shelf stable salad dressings and sauces; powdered drink mixes; specialty teas; hot cereals; macaroni and cheese, skillet dinners and other value-added side dishes and salads; salsa and Mexican sauces; jams and pie fillings under the E.D. Smith brand name; pickles and related products; and other food products including aseptic sauces and liquid non-dairy creamer.
ABOUT BAY VALLEY FOODS
Bay Valley is a wholly-owned subsidiary of TreeHouse Foods. Bay Valley enters into supply contracts with retailers for portion packs used in single-serve brewers.
ABOUT STURM FOODS
Sturm is a wholly-owned subsidiary of Bay Valley Foods that manufactures dry groceries under private label brands, including its "Grove Square" compatible cups. Sturm enters into contracts with suppliers of the machinery and components required to manufacture compatible cups.
SOURCE TreeHouse Foods, Inc.
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