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updated: 2/12/2014 9:25 AM

TreeHouse sues Green Mountain

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Daily Herald Staff Report

Oak Brook-based TreeHouse Foods Inc., and two wholly-owned subsidiaries, Bay Valley Foods LLC, and Sturm Foods Inc. Tuesday said they filed a lawsuit against Green Mountain Coffee Roasters 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 U.S. District Court for the Southern District of New York, TreeHouse accuses Green Mountain of violating federal antitrust laws, and state antitrust and unfair competition statutes and common law of the states of New York, Wisconsin and Illinois.

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Leading the antitrust legal team for the plaintiffs are Dan K. Webb and Aldo A. Badini of Winston & Strawn. Webb is Winston's firm chairman and Badini is a litigation partner with 30 years' experience litigating antitrust cases.

Calls to spokesmen for Green Mountain and Keurig did not immediately respond.

TreeHouse said 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. Green Mountain has announced that its Keurig 2.0 brewer, to be launched later this year, will contain an anticompetitive lockout 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.

"We reluctantly brought this lawsuit not just for ourselves, but for consumers and other companies that similarly encounter anticompetitive practices that violate the law," Sam K. Reed, TreeHouse chairman, president and CEO said in a statement. "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 said. "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."

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