Fight Brewing Over Alleged Coffee Monopoly, Antitrust Law Violations

A Massachusetts business lawsuit alleging a pattern of anti-competitive behavior by Keurig Green Mountain since its K-Cup portion pack patent expired mirrors 14 others brought in five states.

The lawsuits allege numerous violations of both state and federal antitrust and anti-competitive laws designed to protect consumers and businesses from unfair competition. businessgraphics2.jpg

The battle has been percolating for years, but the lawsuits came shortly after the announcement of the soon-to-be-released Keurig 2.0. The primary issue is that this newer model will reject all other kinds of portion packs, except those produced by Green Mountain.

Previously two other coffee portion pack companies – TreeHouse Foods and Rogers Family Co. – won lawsuits filed against them by Keurig when they introduced products to the market. Now, Keurig’s latest model will reject products from those companies – and all others.

The President of TreeHouse was quoted as saying the issue comes down to monopolistic power versus consumer choice. Whether that argument will bear out in court remains to be seen.

Massachusetts has some of the most rigorous antitrust and consumer protection laws in the country, and it’s important for businesses of all sizes to be familiar with them in order to shield themselves from potential legal vulnerability.

The Massachusetts AntiTrust Act, codified in Chapter 93, Section 6 holds that it’s unlawful for anyone engaged in trade or commerce to engage in price-fixing or other activities that would substantially lessen competition or “tend to create” a monopoly in any line of trade.

The statute is extensive, and the ways in which the laws can be violated are numerous. Small business owners need to be aware that these laws aren’t solely applicable to large corporations. Some examples of antitrust law violations by small firms include:

  • Bid-rigging, which is when two or more companies agree to bid in such a way that one of those designated firms submits the winning bid, usually for some type of government contract.
  • Customer allocation, which is an arrangement between competitors to split up consumers, usually by geographic area, in order to eliminate or at least reduce competition.
  • Price fixing, which is when two or more competitors agree on what prices should be charged in a way that ensures the price will go up, or at least that it won’t fall below a certain point.

At the federal level, these violations can result in fines of up to $1 million and prison terms of up to 10 years for each offense. Corporations can be fined up to $100 million for each offense.

At the state level, corporate officers and directors may face up to 1 year in prison, while individuals could face up to 3 years.

An experienced business attorney can help you and the leadership in your firm to recognize potential antitrust issues and adopt preventative measures.

The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call Attorney Graeme Brown at 617-489-0817 or contact us online.

Additional Resources:
Lawsuits claim Keurig Green Mountain violating antitrust laws, April 12, 2014, By Dan D’Ambrosio, Burlington Free Press
More Blog Entries:
Boston Business Watch: Contractual Liability Exclusions in Corporate Contracts, March 25, 2014, Boston Business Lawyer Blog

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Boston Bar Assosiation