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The Cola wars, continued
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May 7, 1998: 7:04 p.m. ET
PepsiCo accuses Coca-Cola of trying to intimidate independent distributors
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NEW YORK (CNNfn) - PepsiCo. Thursday filed an antitrust lawsuit against rival Coca-Cola Co., charging the company with using intimidation to stifle competition.
The suit, filed in federal court in New York, says Coke threatened to stop selling to restaurants that also offered Pepsi.
Pepsi is asking the court to prohibit Coca-Cola from continuing the alleged practices, and is also seeking unspecified damages.
In its complaint, Pepsi said Coca-Cola, which already dominates the sales of fountain drinks, cracked down on independent beverage distributors who distributed both soft drinks. The move came after Pepsi lowered its prices, Pepsi said.
"This competition not only threatened Coca-Cola with the loss of customers, but also posed a substantial risk that Coca-Cola's remaining customers would demand lower prices, more comparable to those being offered by PepsiCo, thereby jeopardizing the monopoly profits that Coca-Cola had enjoyed..." the complaint stated.
Coca-Cola spokesman Bill Hensel called the lawsuit meritless.
"It seems that Pepsi would prefer to compete in the courts rather than the marketplace. All facets of the soft drink industry are highly competitive, especially the fountain segment."
PepsiCo goes on to charge that Coca-Cola embarked on the strategy hoping that food-service distributors would be left with no alternative but to carry Coke.
"When PepsiCo recently intensified its efforts to challenge Coke's monopoly in the market, Coca-Cola took preemptive action by actually cutting off supplies of Coke to food-service distributors that fulfill customer requests to offer Pepsi instead of Coke," Pepsi said in its complaint.
Food-service distributors sell fountain dispensers to restaurants, movie theaters and other customers who buy a variety of food and beverage supplies from one company.
PepsiCo (PEP) shares ended off 1-1/8 to 38 while Coca-Cola (KO) ended down 1/4 to 75-3/4.
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Coca-Cola
Pepsi
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