Antitrust Issues Keeping Coffee Executives Awake
If coffee executives can’t sleep at night, it isn’t the coffee, it’s the antitrust issues.
Coffee companies around the world are working through the holiday season, contending with merger issues in the U.S. and price fixing in Europe.
In the U.S., Green Mountain Coffee Roasters Inc. has voluntarily withdrawn its filing with the FTC regarding its purchase of Diedrich Coffee Inc. after consultation with the antitrust regulators. Green Mountain has stated it withdrew the filing to give the FTC more time to review the merger, and will refile the report on or before Tuesday.
Green Mountain – the manufacturer of Keurig coffeemakers – announced earlier this month that it had beaten Peet’s Coffee & Tea Inc. in a bidding contest for the purchase of Diedrich, the maker of K-cups –single-serve containers used in the Keurig coffeemakers.
In dropping out of the bidding for Diedrich, Peet’s charged that there were significant antitrust issues with Green Mountain’s successful bid.
Whether antitrust regulators will agree with Peet’s largely depends on the definition of the market for coffee brewing systems. Is there a separate market for K-cups? Do single-serve coffee makes compete with the other coffee making machines? These are the types of questions the antitrust regulators will need to answer.
In Europe, Germany’s antitrust regulator fined several coffee roasters, Tchibo GmbH, Melitta Kaffee GmbH and Alois Dallmayr Kaffee OHG, and six managers a total of 159.5 million euros ($229 million) for price fixing.
Germany’s Federal Cartel Office found that the companies had set up a circle of directors and sales managers which were fixing the prices of beans, espresso and filtered bags since 2000. The German regulators found that consumers were being injured because retailers were passing on the higher prices.