BUSINESS

Club Coffee complains to Competition Bureau about Keurig Green Mountain

11/13/2014 09:38 EST | Updated 01/13/2015 05:59 EST
Club Coffee has filed a complaint with the Competition Bureau seeking an investigation into Keurig Green Mountain, saying the single-serve coffee pod and coffee maker company is blocking fair competition.

The formal complaint to the federal regulator is being led by the Toronto-based coffee roaster, though five other industry players are supporting the claims against the K-cup maker.

It follows a $600-million lawsuit filed by Club Coffee last month alleging Keurig has attempted to reduce competition.

Club Coffee has accused Keurig of making false statements and preventing its authorized distributors from dealing in unlicensed pods that are compatible with Keurig brewers. The company also alleges Keurig's licensing agreements with coffee roasters prevents them from dealing with rival pod makers such as Club Coffee.

"We want the bureau to investigate a strategy to force a monopoly in K-cup format single-serve coffee," chief executive John Pigott said in prepared marks for a speech Thursday to the Economic Club of Canada in Ottawa.

"They will see a strategy designed to keep prices higher than they would be in the open market ... They will see a strategy that will squeeze out consumer-friendly innovations."

In its lawsuit, Club Coffee is seeking compensation, punitive damages and a court order to permanently bar Keurig from alleged violations of various federal competition, trade-mark and consumer laws.

A statement from Keurig Canada said the company "is confident that Club Coffee's complaints are without merit" and it "will address the legal proceedings as appropriate."

Greg Scott, a spokesman for the Competition Bureau, said the regulator reviews each complaint it receives carefully.

"We do that so that we can determine if there is evidence of anticompetitive behaviour," Scott said.

Coffee pods have grown into a booming business for Keurig's K-Cup and others like the Nespresso machine, which appeal to coffee fans searching for a faster and more convenient way to brew a cup.

The K-Cup market opened to competitors when Keurig's patent on the pod design expired in 2012.

Other companies launched their own pods compatible with the popular machine, putting a crimp on the growth trajectory of Keurig.

In an attempt to get some of its customers back, Keurig introduced a new coffee brewer this year called the Keurig 2.0, which only lets coffee drinkers use licensed pods from its partners. Technology built into the machine recognizes proprietary pods and rejects those from other companies.

The updated brewer has sparked criticism from early adopters who say they've been surprised when they attempt to make a cup of coffee and their machine won't let them.

Frustrated coffee drinkers have turned to online websites that offer "hacks" to circumvent the coffee machine's system.

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