Pepsi-Cola Co. filed an antitrust lawsuit in U.S. District Court on Thursday, accusing Coca-Cola Co. of monopolizing the sales of fountain soft drinks at restaurant chains and movie theaters.
Pepsi says Coke threatens to yank its product from distributors that also carry Pepsi."We think the suit is totally without merit," said Bill Hensel, a spokesman for Atlanta-based Coca-Cola. "It seems that Pepsi would prefer to compete in court rather than in the marketplace. We believe that all facets of the soft drink industry are highly competitive, especially the fountain segment."
Pepsi has only recently positioned itself to challenge Coke's dominance in the fountain segment of the $55 billion soft drink market.
Coca-Cola leads Pepsi in the overall U.S. soft drink market, with a 43.9 percent market share to Pepsi's 30.9 percent, according to the Beverage Digest/Maxwell Report for 1997.
Fountain sales account for about 27 percent of soft drink sales in the United States.
The lawsuit doesn't address sales of bottles or cans of the soft drinks - only the fountain-dispensed drinks handled by large distributors which control deliveries to chains of restaurants and theaters.
"This distribution superhighway has become the lifeblood of competitive efficiency in the restaurant business, movie theater business and other businesses that depend upon delivery through distributors in order to remain logistically efficient," Pepsi said in the lawsuit.
The lawsuit, filed by Pepsi parent PepsiCo Inc., asked the court to restrain Coca-Cola from entering into agreements with its distributors to exclude Pepsi. It also seeks undetermined damages.
"Coca-Cola's message to foodservice distributors is clear: If a distributor carries Pepsi at a customer's request, the distributor will be terminated by Coke," the lawsuit said.
The lawsuit said Coke had become arrogant at its success in the fountain-dispensed market, which Pepsi credited to two of its own blunders.
Pepsi said it had damaged its ability to compete in the market by distributing its fountain products through local bottlers at a time when specialized distributors were taking over the market.