To all articles on Cola War strategies from Businessweek and the Washington Post
BUSINESS WEEK ONLINE
May 28, 1998
COKE: PEPSI'S LAWSUIT IS ALL FIZZ
Edited by Douglas Harbrecht
In a court filing expected on May 28, Coca-Cola Co. will argue that PepsiCo's lawsuit alleging anticompetitive practices in the fountain business against the No. 1 cola maker should be dismissed as groundless. Coke's defense? Nothing is blocking Pepsi from getting into the market.
Pepsi sued Coke on May 7 in the U.S. Circuit Court for the southern district of New York, arguing that the world's largest soft-drink company uses its huge size to squelch Pepsi's push into the important "fountain" segment of the business, where movie theatres, restaurants, and sports stadiums dispense soft drinks to customers.
Pepsi claims that Coke's exclusive contracts with independent distributors prevent Pepsi from gaining access to its customers. In its response, Coke will argue that there's nothing in its conduct that would prevent Pepsi from reaching its customers via distributors not
currently doing business with Coke.
There are more than 3,000 independent distribution companies, many of which would be available to Pepsi, and the No. 2 soft drink company also could reach fountain customers directly, through its own distribution channels, Coke is said to argue.
The Coke response also takes up a narrower legal issue arising from Pepsi's suit. Pepsi's lawsuit does not properly define a market, according to Coke's argument, a company source says. Coke's response is said to argue that Pepsi fails to define the market because
its complaint covers restaurants that are served both by Coke bottlers and by independent distributors, so its definition is too broad to have any legal meaning.
The fountain business accounts for 27% of all U.S. soft-drink sales, and Pepsi is focusing on that segment after spinning off its restaurant division last year. Until the spin-off of Tricon Global Restaurants, the parent of KFC, Taco Bell, and Pizza Hut, many restaurant chains were wary of carrying Pepsi drinks for fear of enriching the three chains owned by Pepsi.
By David Greising in Atlanta
Taking the 'Cola Wars' Into Court
By Sharon Walsh
Washington Post Staff Writer
Sunday, May 31, 1998; Page H01
NEW YORK-Has there ever been a rivalry more combative than Pepsi vs. Coke?
Perhaps the Redskins vs. the Cowboys? Or Ford vs. General Motors? McDonald's vs. Burger King? Men vs. women?
The contest between the two soft-drink rivals has been the Super Bowl of product sales, involving marketing gimmicks, ad slogans, price wars, highly paid spokesmen and verbal brickbats.
washingtonpost.com
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