Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 1 of 26
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF IOWA
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`MAHASKA BOTTLING COMPANY, INC.,
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`Case No. 16-114
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`Plaintiff,
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`v.
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`COMPLAINT
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`PEPSICO, INC. and BOTTLING GROUP, LLC,
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`Defendants.
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`COMPLAINT
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`COMES NOW Mahaska Bottling Company, Inc., who files this Complaint and alleges
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`as follows:
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`PARTIES AND RELEVANT NON-PARTIES
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`1.
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`Plaintiff Mahaska Bottling Company, Inc., (“Mahaska”) is an Iowa Corporation
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`with its principal office located at 1407 17th Avenue, East Oskaloosa, Iowa 52577.
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`2.
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`Defendant PepsiCo, Inc. (“PepsiCo”) is a New York Corporation organized,
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`existing and doing business under and by virtue of the laws of the State of North Carolina, with
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`its office and principal place of business located at 700 Anderson Hill Road, Purchase, New
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`York 10577.
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`3.
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`Defendant Bottling Group LLC a/k/a and/or d/b/a Pepsi Beverages Company
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`(“PBC”) is a Delaware subsidiary of PepsiCo, which is a successor to formerly independent
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`bottling companies, Pepsi Bottling Group, Inc. (“PBG”), and PepsiAmericas, Inc. (“PAS”) each
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`of which had been acquired, through acquisition of all outstanding voting securities, by PepsiCo
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`in or around year 2010.
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`4.
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`Non-Party Dollar General Corporation (“Dollar General”)
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`is a Tennessee
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`Corporation. Dollar General is the largest discount retailer in the United States with over 11,500
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`stores located in over 43 states, including more than 80 stores in Iowa.
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`5.
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`Non-Party Family Dollar Stores, Inc., (“Family Dollar”) is a North Carolina
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`Corporation and, as of July 2015, a wholly owned subsidiary of Dollar Tree, Inc., a Virginia
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`Corporation. Family Dollar operates over 7800 discount stores throughout the United States,
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`including more than 30 stores in Iowa.
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`6.
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`Non-Party Dr Pepper Snapple Group (“DPSG”) is a Texas Corporation that is a
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`leading integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the
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`United States ("U.S."), Canada and Mexico, and, after the Coca-Cola Company and PepsiCo,
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`DPSG owns the third largest share of the market for Carbonated Soft Drink (“CSD”) concentrate
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`in the United States.
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`JURISDICTION AND VENUE
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`7.
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`PepsiCo and PBC are, and at all times relevant herein have been, engaged in
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`commerce, or in activities affecting commerce.
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`8.
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`This is an action under both state law and Sections 4 and 16 of the Clayton Act,
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`15 U.S.C. §§ 15 and 26 to recover treble damages, costs of suit, and reasonable attorneys’ fees.
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`Plaintiff’s federal antitrust claims are based on Defendants’ unlawful actions and conspiracy with
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`third parties arise under Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 2(a) of the
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`Robinson Patman Act, 15 U.S.C. § 13.
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`9.
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`This Court has original jurisdiction over the federal subject matter of this action
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`pursuant to 28 U.S.C. §§ 1331 and 1337, and has supplemental jurisdiction over the appended
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`state law claims pursuant to 28 U.S.C. § 1367.
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`10.
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`This Court also has diversity jurisdiction over the state law claims. The parties
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`are citizens of different states and the amount in controversy exceeds $75,000.00, exclusive of
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`interest and costs.
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`11.
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`Venue is proper in this Court under 15 U.S.C. § 22, because Defendants are found
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`or transact business in this District.
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`12.
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`Venue is also proper under 28 U.S.C. § 1391(b)(2) in that a substantial part of the
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`events or omissions giving rise to the claims occurred in this District.
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`FACTUAL BACKGROUND
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`THE MAHASKA TERRITORIES
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`13. Mahaska is a local, family owned independent bottler that provides jobs to
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`hundreds of Iowans. Mahaska was established in 1889, and entered its first Exclusive Bottling
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`Appointment (“EBA”) with PepsiCo in 1928. After PepsiCo emerged from bankruptcy in the
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`1930s (with the support of independent bottlers including Mahaska), Mahaska continued to serve
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`as the exclusive Pepsi bottler and distributor in its territory.
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`14.
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`In 1948, Mahaska entered into a new EBA with PepsiCo that reaffirmed
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`Mahaska’s exclusive right, in perpetuity, to use the Pepsi trademark and to sell Pepsi soft drink
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`products in various Iowa counties, including Marion; Mahaska; Keokuk; Washington; Jefferson;
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`Wapello; Monroe; Lucas; Appanoose; and parts of Jasper and Poweshiek (the “Iowa
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`Territories”). In subsequent agreements with PepsiCo, Mahaska was granted: 1) rights to Pepsi
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`syrup used for fountain products; 2) additional exclusive territories including parts of Nebraska
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`and Kansas; and 3) additional products such as Diet Pepsi, Mountain Dew, and etc. Collectively,
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`Mahaska’s exclusive territories under its agreements with PepsiCo are referred to below as the
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`“Mahaska Territories.” As discussed below, Mahaska also has exclusive rights to distribute
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`DPSG products in the Mahaska Territories.
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`15.
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`Under the EBA and related agreements, Mahaska must purchase the concentrate
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`for carbonated soft drinks (i.e., the “concentrate”) from PepsiCo, and must “vigorously push”
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`sales of PepsiCo products in the Mahaska Territories.
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`In return, Mahaska was given full
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`discretion to set prices of PepsiCo products to customers in the Mahaska Territories. Through its
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`own diligence, high quality service and support, and fair pricing practices, Mahaska successfully
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`distributed soft drink products in its territories for more than a century. A true and correct copy
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`of the EBA is attached hereto as Exhibit ”A.”
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`16.
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`PepsiCo is an American multinational food, snack and beverage corporation with
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`interests in the manufacturing, marketing, and distribution of snack foods, beverages, and other
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`products including but not limited to soft drink concentrate.
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`17.
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`PBC is a direct competitor of Mahaska in the Mahaska Territories. Specifically,
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`PBC competes with Mahaska in selling snack/vending, beverages (such as Gatorade), and other
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`such products.
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`18.
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`Beginning in the 1920s, PepsiCo established a network of independent bottlers,
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`each having exclusive territories, as a means of financing expansion and competing with the
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`leading soft drink company of the time, Coca-Cola Company. Without financial support from
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`independent bottlers such as Mahaska, PepsiCo would not have survived its bankruptcy in the
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`1930s or subsequently prospered.
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`19.
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`For decades, PepsiCo recognized both the critical role of the independent bottlers
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`and exclusive rights that were required to incentivize their substantial investments in the growth
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`of the PepsiCo brands. Thus, and as acknowledged by the U.S. Court of Appeals for the Fifth
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`Circuit,
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`in Pepsi-Cola Bottling Company of Pittsburg, Inc. v PepsiCo, Inc. 431 F.3d 124, 1249
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`(5th Cir. 2005) in his August 14, 1975, testimony before the Federal Trade Commission, then-
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`PepsiCo President Walter S. Mack discussed how PepsiCo used the promise of exclusivity to
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`persuade independent businessmen to become PepsiCo bottlers:
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`“[W]e had to give them confidence in the early days that we were going to
`win our trademark suits and that they were taking on a beverage which
`they would have the exclusive right to from then on for the rest of their
`lives․ [We told the bottlers] that the parent company would protect their
`franchise, the terms and conditions of the franchise, and do everything we
`could to protect both the trademark and the name and their territory for
`them on an exclusive basis.
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`Mack testified that PepsiCo told the bottlers they would have an exclusive
`franchise for the rest of their lives or in perpetuity.
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`20.
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`Beginning in the 1980s; however, PepsiCo adopted strategies to undermine the
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`exclusive rights of many bottlers and sought increasing control over relationships with customers
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`having multiple locations around the country. For example, in the early 1990s, PepsiCo began to
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`push marketing programs built upon agreements with large chain customers, called the Customer
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`Development Agreement (“CDA”). PepsiCo uses such agreements to set supposedly national (or
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`uniform) pricing for large retail chains and to overcome its inability to compel independent
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`bottlers, such as Mahaska, to offer Pepsi products at specific prices.
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`21.
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`The CDA’s established a rebate that PepsiCo will pay to replicate the “national”
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`price it wants to offer a particular customer. Because PepsiCo cannot force Mahaska and/or
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`other independent bottlers to sell PepsiCo products at a particular price, under a CDA, PepsiCo
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`generally pays a rebate to account for the difference between the price charged by the bottler and
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`the national price agreed upon by PepsiCo and the particular customer.
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`22.
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`To reduce its own costs and protect its profitability, and contrary to express
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`commitments made to Mahaska and other independent bottlers, PepsiCo has persistently
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`attempted to persuade and/or coerce independent bottlers into accepting a portion of the rebate
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`costs. In many instances, PepsiCo and a bottler enter into a Marketplace Investment Agreement
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`(“MIA”) under which PepsiCo makes payments to the bottler in return for accepting a portion of
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`rebate costs and costs related to national advertising campaigns.
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`23.
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`Unlike many other independent bottlers, Mahaska does not agree to participate in
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`any CDA or MIA arrangements. Such agreements, in Mahaska’s view, serve only to erode its
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`exclusive rights and relationships with customers of PepsiCo products in its territories.
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`24.
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`Despite Mahaska’s insistence on maintaining its exclusive rights and customer
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`relationships, Mahaska has long cooperated with PepsiCo’s efforts to offer national pricing to
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`large customers. Mahaska’s sole condition for such cooperation has been that PepsiCo honor its
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`own pricing commitments (while Mahaska will honor its own commitments to customer’s in its
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`exclusive territories).
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`25.
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`In 2003, PepsiCo and Mahaska formalized their agreement with respect
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`to
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`national customers. In a letter agreement entered as part of exclusive arrangements for multiple
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`PepsiCo products, PepsiCo and Mahaska agreed, in Paragraph 8, as follows:
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`“[Mahaska] will not be required to enter into any Marketplace Investment
`Agreements nor will [Mahaska] be required to participate in CMAs or CDAs
`(regional or national) nor be financially responsible or liable for the offers
`(including pricing programs, discounts or rebates) made by [PepsiCo] and/or any
`other bottler to any customer, unless the Bottlers and the Company otherwise
`specifically agree in writing.
`If the Company, [PepsiCo] or any other bottler
`make any such offers, the offering party (and not [Mahaska]) will be responsible
`for fulfilling the terms of any such offers.”
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`“Omnibus Side Letter Concerning Exclusive Bottling Appointments, Exclusive Syrup
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`Appointments, Waiver Agreements, and Distribution Agreements for Mahaska Bottling
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`Company,” Bradley G. Muhl (Mahaska President) to Kathryn L, Carson, Esq. (Counsel for
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`PepsiCo), dated July 1, 2003. (“Omnibus Side Letter”). A true and correct copy of the Omnibus
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`Side Letter is attached hereto as Exhibit ”B.”
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`26.
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`Paragraph 8 of the Omnibus Side Letter reiterated the express commitment made
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`by PepsiCo to all of its independent bottlers at the outset of its CDA program. In a memorandum
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`to “All Pepsi-Cola Bottlers,” dated September 24, 1993, Gerald W. Casey, then Vice President
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`and Associate General Counsel of PepsiCo, issued a memo to all Pepsi-Cola bottlers which
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`stated in pertinent part:
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`The Pepsi Bottler has always enjoyed the exclusive right to manufacture and
`sell franchised products in bottles and cans in its Territory, to the exclusion of
`other Pepsi Bottlers and PepsiCo. Equally fundamental
`is the Bottler's
`independence in determining price and other conditions of sale to its customers.
`PepsiCo remains strongly committed to exclusive territories and the Bottler's
`exclusive relationship with its customers. Pepsi-Cola company has expressly
`recognized that Bottlers will not be deemed to waive or be estopped to assert their
`exclusive rights where PepsiCo makes "headquarters calls" on behalf of Bottlers.
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`… PepsiCo recognizes the need for protection of Bottler rights in connection with
`such discussions and accordingly agrees as follows: (i) by allowing such
`discussions the Bottler neither waives its right
`to enforce its exclusive
`Appointment nor is estopped fromasserting any right:
`the Bottler’s
`(ii)
`independence in determining its prices and other terms of sale will not be
`compromised; (iii) PepsiCo may offer incentives to Bottlers who elect
`to
`participate in specific programs which PepsiCo may develop with national chains,
`but the Bottler's freedom to decide whether to participate in any such program
`will not be compromised by means of retribution, pressure or coercion:
`however, this shall not limit any rights which PepsiCo or the Bottler has under the
`terms of the Exclusive Bottling Appointment: and (iv) PepsiCo will make every
`reasonable effort to provide Bottlers with information sufficient to make an
`informed business and legal decision regarding participation in any national chain
`program…
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`PepsiCo remains committed to the principle that the local Pepsi Bottler is the
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`sole seller of Pepsi-Cola products in bottles and cans to customers within its
`Territory, and enjoys an exclusive, direct and highly valuable relationship with
`each bottle and can customer. [Emphasis Added].
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`The Casey memorandum has, in dealings between PepsiCo and independent bottlers since its
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`distribution, been call the “Rule of ’94.” A copy of the Casey memorandum is attached hereto as
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`Exhibit ”C.”
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`MAHASKA’S EXCLUSIVE DR PEPPER TERRITORIES
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`27.
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`Dr Pepper Snapple Group (“DPSG”),
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`like PepsiCo,
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`is a leading beverage
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`company that offers more than 50 brands of carbonated soft drink juices, teas, and other
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`beverages. DPSG offers six of the top 10 non-cola soft drinks in the United States, including Dr
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`Pepper, Snapple, 7UP, A&W, Canada Dry, Crush, Schweppes, Squirt, and Sunkist among others.
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`28. Mahaska has distributed DPSG products since 1975 in territories that overlap with
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`its exclusive PepsiCo territories.
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`PEPSICO’S BREACH OF CONTRACT AND DISPARAGEMENT OF MAHASKA
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`29.
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`Contrary to the Parties’ practices over the past 50 years, the Mahaska EBAs and
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`Syrup Appointments with Mahaska, and Paragraph 8, PepsiCo has now sought to coerce
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`Mahaska to assume responsibility for pricing agreed to between PepsiCo and certain national
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`customers—namely, Dollar General and Family Dollar Stores—without Mahaska’s knowledge
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`or consent.
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`Indeed, some of the prices established by PepsiCo are below Mahaska’s costs, and
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`can only be considered an attempt to undermine Mahaska and force it out of the market.
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`30.
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`PepsiCo has promised pricing to large retail chains with outlets in Mahaska’s
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`exclusive territories that could not be met by Mahaska and which is disruptive to Mahaska’s
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`longstanding relationships with both the subject companies and its other
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`long-standing
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`customers. Unlike PepsiCo, Mahaska has never been willing to price discriminate among its
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`customers and, thereby, undermine competition among them and harm its own reputation,
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`credibility, and business relationships.
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`31.
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`Further, to implement its conspiracy to unlawfully grab Mahaska’s exclusive
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`territory, PepsiCo has disparaged Mahaska with the false statement that Mahaska is unwilling to
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`serve its long-standing customers.
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`32.
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`Thus, a February 26, 2016, Family Dollar email communication makes clear that
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`PepsiCo disparaged Mahaska to disrupt its exclusive right to distribute Pepsi products in its
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`territory through false statements that include the following:
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`“Please be advised that your store is 1 of 67 that will no longer have Pepsi
`service. Your local Pepsi bottler is unwilling to do business with Family Dollar
`due to our aggressive pricing. We have exhausted all options through 6 months of
`negotiations to fix this situation. Select stores may have service halted
`immediately while others may receive service until the end of March, 2016.”
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`A true and correct copy of the Family Dollar (email or letter) is attached hereto as Exhibit ”D.”
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`In fact, neither PepsiCo nor Family Dollar ever “negotiated” with Mahaska to fix the alleged
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`“problem,” and PepsiCo, as it has repeatedly admitted, had no right to negotiate prices for Pepsi
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`products to be sold in Mahaska’s exclusive territories.
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`PEPSICO’S UNLAWFUL COLLUSION, PRICE-FIXING, PRICE DISCRIMINATION AND VIOLATION
`OF CONSENT ORDER ENTERED BY THE FEDERAL TRADE COMMISSION
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`33.
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`On August 3, 2009, PepsiCo agreed to acquire its two largest independent bottlers
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`and distributors, Pepsi Bottling Group (“PBG”) and PepsiAmericas (“PAS”), for approximately
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`$7.8 billion. When the agreement was announced, PepsiCo already owned about 40 percent of
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`Pepsi Bottling Group and about 43 percent of PepsiAmericas, which together account for about
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`three-quarters of all U.S. sales of PepsiCo carbonated soft drinks, as well as 20 percent of all
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`U.S. bottler-distributed sales of DPSG’s carbonated soft drinks.
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`34.
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`In a related deal, on December 7, 2009, PepsiCo agreed to continue bottling and
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`distributing carbonated soft drink brands of DPSG which included Dr Pepper, Crush, and
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`Schweppes in the territories of the two bottlers. Under the exclusive licensing agreement,
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`PepsiCo will pay DPSG $900 million for a license to distribute and sell these brands for the next
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`20 years.
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`35.
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`PepsiCo and DPSG are direct competitors along with the Coca-Cola Company, in
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`the highly concentrated and difficult-to-enter markets for branded soft drink concentrate and
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`branded and direct-store-delivered CSD.
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`In all, the total sales of soft drink concentrate in the
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`United States are about $9 billion annually, and the total U.S. sales of CSD sold by retailers are
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`about $70 billion.
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`36.
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`The Federal Trade Commission (“FTC”) has long been concerned with the need
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`to preserve competition among Coca-Cola (the largest soft drink company), PepsiCo, and DPSG.
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`Although Coca-Cola has the largest market share in the United States, PepsiCo and DPSG
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`together account for more than 50% in CSD sales in the United States, and in some markets more
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`than 80%.
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`37.
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`Accordingly, the FTC stepped-in to enjoin PepsiCo’s proposed acquisition of
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`Seven-Up and Coca-Cola’s proposed acquisition of Dr Pepper in 1986. After these failed efforts
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`to further consolidate the CSD industry, Seven-Up and Dr Pepper merged in late 1986 and they
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`were later joined by Cadbury (1995) and Snapple Beverage Group (2000) to form DPSG.
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`38. More recently, the FTC acted to protect competition from potential collusion
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`between PepsiCo and DPSG through PepsiCo vertically integrated bottlers (or distribution
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`companies) such as PBG and PAS. On September 27, 2010, the FTC initiated action against
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`PepsiCo to enjoin PepsiCo’s acquisitions of PBC and PAS (and a third bottler) in the absence of
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`competitive safeguards. See FTC Docket No. C-4301. A copy of the FTC’s Complaint Against
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`PepsiCo is attached hereto as Exhibit ”E.”
`
`39.
`
`The FTC’s Complaint alleged, inter alia in Paragraph 36 thereof:
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`PepsiCo’s access to competitively sensitive confidential information provided by
`DPSG to PepsiCo in furtherance of the DPSG-PepsiCo license agreement, or the
`use by PepsiCo of competitively sensitive information passed to it by DPSG in
`furtherance of the DPSG-PepsiCo license agreement, may substantially lessen
`competition in the relevant markets in some or all of the following ways,
`
`
`
`
`
`
`
`by eliminating direct competition between PepsiCo and DPSG,
`by increasing the likelihood that PepsiCo may unilaterally exercise market
`power or influence and control DPSG’s prices, and
`by increasing the likelihood of, or facilitating, coordinated interaction;
`each of which may result in higher prices to consumers.
`
`40.
`
`To address competitive concerns with respect to the acquisitions of PBG and PAS
`
`(now PBC), the FTC entered a decision and order that obligated PepsiCo and PBC to maintain
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`separation of PepsiCo and DPSG sales and marketing information and promotions. A copy of
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`the FTC’s decision and order is attached hereto as Exhibit ”F.” In brief, the Order prohibits
`
`PepsiCo from using confidential DPSG information in connection with promotion and sales of
`
`PepsiCo products.
`
`41.
`
`Thus, the Order, in Section II(A)(7-8), states, inter alia:
`
` DPSG Commercially Sensitive Information is not used in connection with
`Concentrate-Related Functions in any way, such prohibition to include but not
`be limited to using the information even if the DPSG Commercially Sensitive
`Information is not itself revealed;
`
` DPSG documents and copies of documents reflecting or containing DPSG
`Commercially Sensitive Information (whether in the form provided by DPSG
`or in a form created by PepsiCo) are maintained as confidential until the
`earlier of five (5) years or when DPSG Commercially Sensitive Information
`becomes public through no act of PepsiCo; and
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` DPSG Information Relating to DPSG Independent Promotions shall not be
`provided to the National Accounts Sales Team any time prior to the disclosure
`of such information to any Bottler other than PepsiCo.
`
`42.
`
`On information and belief, in imposing conditions on PepsiCo’s acquisition of
`
`PBC, the Federal Trade Commission sought to prevent PBC from becoming a vehicle for
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`unlawful price-fixing and collusion between PepsiCo and DPSG.
`
`43.
`
`PepsiCo and PBC actions and communications with respect to Family Dollar
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`stores, shows that PepsiCo and PBC have ignored the obligations of the Order and, to the
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`contrary, have orchestrated an unlawful price-fixing agreement with respect to sales of PepsiCo
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`and DPSG products.
`
`44.
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`PepsiCo and PBC have, moreover, engaged in unlawful price discrimination in
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`violation of Section 2(a) of the Robinson Patman Act by selling soft drink products below cost to
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`the detriment of competitors of Family Dollar and Dollar General and further in an effort to force
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`Mahaska out of the market and thereby facilitate for future anticompetitive increases in prices on
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`both PepsiCo and DPSG product to all consumers in the relevant market.
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`45.
`
`PBC has effectively admitted the price fixing in email correspondence notifying
`
`Mahaska that PepsiCo and PBC entered into an unlawful pricing arrangement with Family
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`Dollar covering not only PepsiCo products but also DPSG products and unlawfully instructing
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`Mahaska to discontinue all DPSG service to Family Dollar.
`
`---------- Forwarded message ----------
`From: Daniels, Donna {PBC} <Donna.Daniels@pepsico.com>
`Date: Wed, Mar 16, 2016 at 4:53 PM
`Subject: FW: Pepsi stores not going forward
`To: "breding@pepsidbq.com" <breding@pepsidbq.com>,
`"mikegarrison@winfieldbottling.com" <mikegarrison@winfieldbottling.com>,
`"thaubrich@iw.net" <thaubrich@iw.net>, "pepsimca@att.net"
`<pepsimca@att.net>, "markm@pepsiselmainc.com"
`<markm@pepsiselmainc.com>, "jfrush@themahaskagroup.com"
`
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`Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 13 of 26
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`<jfrush@themahaskagroup.com>, "toddjohnson@pepsidavenport.com"
`<toddjohnson@pepsidavenport.com>, "grpepsi@neibottling.com"
`<grpepsi@neibottling.com>
`Hi please let me know if you deliver Dr Pepper in your market. Also, please
`confirm if you are still making deliveries to FD. If you are still not aligned to
`the FD program, deliveries should be stopped on 3/31.
`Thank you,
`Donna Daniels
`Pepsi Beverages Company
`Phone: 336-896-5598
`donna.daniels@pepsico.com
`
`From: CALLIE LAMB [mailto:CLAMB@FAMILYDOLLAR.com]
`Sent: Tuesday, March 15, 2016 2:43 PM
`To: Daniels, Donna {PBC}
`Subject: pepsi stores not going forward
`Hi Donna,
`For the 34 stores not going forward with pepsi, which of these have Dr Pepper
`delivered by Pepsi?
`Callie Lamb
`Merchandise Coordinator -Beverages
`10401 Monroe Road, Matthews, NC 28105
`*: clamb@familydollar.com | 704-814-5059
`
`A true and correct copy of the Donna Daniel’s email is attached hereto as Exhibit ”G.”
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`46.
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`The prices agreed upon among PepsiCo, PBC, Family Dollar and Dollar General
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`for both PepsiCo and DPSG products are below Mahaska’s costs for many products.
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`47.
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`By pricing below cost, and disparaging Mahaska, PepsiCo and PBC seek to drive
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`Mahaska out of the market (notwithstanding its exclusive rights) so that they can subsequently
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`raise prices in Mahaska’s territories.
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`THE RELEVANT MARKETS AND MARKET POWER
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`48. With respect to Mahaska’s claim of per se unlawful price-fixing and tying in
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`violation of the Section 1 of the Sherman Antitrust Act, 15 U.S.C § 1, no allegations with respect
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`the relevant product or geographic markets are required.
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`PLAINTIFF’S ORIGINAL COMPLAINT
`732593
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`PAGE 13
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`Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 14 of 26
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`49. With respect to Mahaska’s claims that Defendants have violated the Robinson
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`Patman Act and Section 1 of the Sherman Antitrust Act, 15 U.S.C § 1 under the Rule of Reason,
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`the relevant product Market is all CSD, and the relevant geographic market are the areas of Iowa,
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`Kansas, and Nebraska that are included in the Mahaska Territories.1
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`50.
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`PepsiCo acting in concert with DPSG and PBC has market power in the relevant
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`market as PepsiCo and DPSG branded products together account for more than 50% of sales of
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`CSD and in some markets, including those served by Mahaska, they together account for more
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`than 80%.
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`CAUSES OF ACTION
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`COUNT I
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`PER SE UNLAWFUL PRICE FIXING AND PREDATORY PRICING IN VIOLATION OF SECTION 1 OF
`THE SHERMAN ACT (15 U.S.C. § 1)
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`51. Mahaska re-alleges and incorporates each of
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`the foregoing paragraphs by
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`reference as if fully set forth herein.
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`52.
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`PepsiCo and DPSG are direct competitors in the CSD market in the Mahaska
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`Territories and throughout the United States.
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`53.
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`By and through PBC, PepsiCo and DPSG have unlawfully colluded to set prices
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`for CSD products in the Mahaska Territories.
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`54.
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`PepsiCo and DPSG have fixed wholesale prices for sales to stores in the “Dollar
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`Channel” below Mahaska’s costs (which are controlled by PepsiCo). The Dollar Channel, which
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`1 The Soft Drink Interbrand Competition Act of 1980, 15 U.S.C § 3501 expressly acknowledges the proprietary and role of
`exclusive territorial licenses for the manufacture, distribution and sale of “a trademarked soft drink product” which grant “the
`licensee the sole and exclusive right
`to manufacture, distribute and sell such product in a defined geographic area… Provided,
`that such product is in substantial and effective competition with other products of the same general class in the relevant market
`or markets.
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`PLAINTIFF’S ORIGINAL COMPLAINT
`732593
`
`PAGE 14
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`Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 15 of 26
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`includes discount stores like Dollar General and Family Dollar, is a distinct submarket for sales
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`of CSD.
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`55.
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`On information and belief, PepsiCo, DPSG and PBC have conspired to drive
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`Mahaska out of the market for CSD in the Mahaska Territories and/or the Dollar Channel in
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`Mahaska Territories.
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`56.
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`On information belief, PepsiCo, DPSG and PBC will seek to recoup losses from
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`predatory pricing and sales below cost by raising prices to consumers after forcing Mahaska out
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`of the market.
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`57. Mahaska has suffered, and will suffer, substantial harm to it business and property
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`as the result of Defendants’ per se unlawful price fixing.
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`58. WHEREFORE, Plaintiff Mahaska Bottling Co, Inc., demands that judgment be
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`entered in its favor against Defendants PepsiCo, Inc., and Bottling Group, LLC a/k/a and/or d/b/a
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`Pepsi Beverages Company on Count I of the Complaint for statutory damages including but not
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`limited to treble damages, costs of this action (including reasonable attorney’s fees), equitable
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`relief, and for such further relief the Court finds proper and necessary.
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`COUNT II:
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`CONSPIRACY AND ATTEMPT TO MONOPOLIZE PRICING IN VIOLATION OF SECTION 2 OF THE
`SHERMAN ACT (15 U.S.C. § 2)
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`59. Mahaska re-alleges and incorporates each of
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`the foregoing paragraphs by
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`reference as if fully set forth herein.
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`60.
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`PepsiCo and DPSG together account for more than 50% of sales of CSD in the
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`relevant market.
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`PLAINTIFF’S ORIGINAL COMPLAINT
`732593
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`PAGE 15
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`Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 16 of 26
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`61.
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`By and through PBC, PepsiCo and DPSG have conspired to and attempted to
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`monopolize sales of CSD in the relevant market.
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`62.
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`By and through PBC, PepsiCo and DPSG have committed numerous acts in
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`furtherance of their conspiracy to monopolize, including fixing prices below cost in an effort to
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`drive competitors, including Mahaska, out of the market.
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`63.
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`The conspiracy among PBC, PepsiCo and DPSG has a dangerous probability of
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`success as PepsiCo and PBC control the costs of competitors, such as Mahaska, by virtue of their
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`control over the price of their respective soft drink concentrates.
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`64.
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`As a result of Defendants’ conspiracy and attempt to monopolize the relevant
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`market for CSD, Mahaska has suffered and will continue to suffer substantial competitive injury
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`and irreparable harm.
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`65. WHEREFORE, Plaintiff Mahaska Bottling Co, Inc., demands that judgment be
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`entered in its favor against Defendants PepsiCo, Inc., and Bottling Group, LLC a/k/a and/or d/b/a
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`Pepsi Beverages Company on Count II of the Complaint for statutory damages including but not
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`limited to treble damages, costs of this action (including reasonable attorney’s fees), equitaible
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`relief, and for such further relief the Court finds proper and necessary.
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`COUNT III:
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`UNLAWFUL PRICE DISCRIMINATION AND REBATES IN VIOLATION OF THE ROBINSON PATMAN
`ACT (15 U.S.C. § 13)
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`66. Mahaska re-alleges and incorporates each of
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`the foregoing paragraphs by
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`reference as if fully set forth herein.
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`67.
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`PepsiCo and PBC offer commodities of like grade and quality, namely CSD
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`products, in commerce to purchasers in the relevant market.
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`PLAINTIFF’S ORIGINAL COMPLAINT
`732593
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`PAGE 16
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`Case 4:16-cv-00114-JEG-SBJ Document 1 Filed 04/15/16 Page 17 of 26
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`68.
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`In the course of such commerce, PepsiCo and PBC have discriminated in price
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`between different purchasers of such CSD commodities (who are also in commerce).
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`69.
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`The CSD commodities are sold for use, consumption, or resale within the United
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`States.
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`70.
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`The effect of such discrimination may be substantially to lessen competition or
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`tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition
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`with PepsiCo and PBC.
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`71.
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`The effect of such discrimination may be substantially to lessen competition or
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`tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition
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`with Family Dollar and Dollar General.
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`72.
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`PepsiCo and PBC have paid or contracted for the payment of funds for the benefit
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`of Dollar General in the course of commerce as compensation or in consideration for services or
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`facilities in connection with the processing, handling, sale, or offering for sale CSD
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`Commodities.
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`73.
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`The payments to Dollar General are not available on proportionally equal terms to
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`all other customers competing in the distribution of such products or commodities.
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`74.
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`PepsiCo and PBC have paid or contracted for the payment of funds for the benefit
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`of Family Dollar in the course of commerce as compensation or in consideration for services or
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`facilities in connection with the processing, handling, sale, or offering for sale