Bed Bath & Beyond sues Keurig over K-Cup monopoly claims

MANHATTAN (CN) — Big-box retail chain Bed Bath & Beyond filed an antitrust complaint against beverage conglomerate Keurig Dr Pepper, accusing Keurig of unlawful dominance in the market for plastic, single-serve coffee pods, known as K-Cups.

Bed Bath & Beyond, which closed all of its brick-and-mortar retail stores after filing for bankruptcy in 2023, claims Keurig held a monopoly position in the K-Cup market and charged supracompetitive prices, which caused Bed Bath & Beyond to be overcharged for its purchases of over $1 billion worth of K-Cups from Keurig between 2012 and 2023.

Keurig, formerly known as Keurig Green Mountain, deployed sham lawsuits and a network of exclusionary patent agreements to foreclose the emergence of competition since September 2012, when the patents covering the technology for K-Cup filters expired, Bed Bath & Beyond claims in the complaint.

“In an effort to reclaim its market share, which started at 100% when its patents expired, Keurig reinforced its anticompetitive scheme by, among other actions, furthering its web of exclusionary arrangements through the Compatible Cup supply and distribution chain,” Bed Bath & Beyond wrote in its complaint.

Represented by William V. Reiss from New York City firm Crowell & Moring, Bed Bath & Beyond also points to exclusionary arrangements with companies at multiple levels of the single-serve coffee pod supply and distribution chain, which it argues excluded and suppressed competition and has allowed Keurig to maintain its monopoly and monopoly pricing of K-Cups.

Keurig’s 80% market share for coffee pod sales is in part derived from its portfolio of over 75 coffee brands it owns or licenses trademarks from for branded K-Cup products it distributes, including Starbucks, Kraft, Peet’s, Dunkin’ Donuts, Smucker and the Coffee Bean & Tea Leaf.

Bed Bath & Beyond claims Keurig mounted a new phase of the antitrust conspiracy when it launched the successor K-Cup brewing system in 2015, which was embedded with technology intended to ensure that only Keurig’s K-Cups can be used with the 2.0 K-Cup Brewer.

“As prior generation K-Cup Brewers became obsolete, Keurig intended for the 2.0 K-Cup Brewer to lock customers into purchasing only K-Cups and lock out competition from competitor cups,” the retailer wrote in the complaint. “The announcement and introduction of the 2.0 K-Cup Brewer hindered competition by scaring off actual and potential manufacturers of competitor cups.”

In its complaint filed Friday evening in the U.S. District Court for the Southern District of New York, Bed Bath & Beyond accuses Keurig of federal antitrust violations under Sections 1 and 2 of the Sherman Act, and Sections 3 and 4 of the Clayton Act.

In the five-count complaint, Bed Bath & Beyond also brings one claim of unjust enrichment.

Bed Bath & Beyond, which brought the complaint under its post-bankruptcy handle 20230930-DK-Butterfly-1, seeks compensatory and trebled damages resulting from Keurig’s violations of the Sherman Act.

The online retailer Overstock relaunched Bed Bath & Beyond as an online entity in August 2023 after acquiring the bankrupt retail chain’s intellectual property assets for $21.5 million two months earlier.

Bed Bath & Beyond names M. Block & Sons, a privately held, Illinois-based logistics and supply chain services company that fulfilled the retailer’s K-Cup order, as a nonparty co-conspirator in the antitrust conspiracy.

Keurig Dr Pepper Inc. is a publicly traded American beverage company headquartered in Burlington, Massachusetts, and Frisco, Texas. It was formed on July 9, 2018, through the merger of Keurig Green Mountain and Dr Pepper Snapple Group.

Representatives for Keurig Dr Pepper did not immediately respond to request for comment Monday.

The company previously settled a consumer class action for $10 million over claims Keurig misleads consumers with claims that its plastic single-serve coffee pods are recyclable.

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