Club Coffee LP has filed a Competition Bureau complaint against coffee giant Keurig Green Mountain Inc. over alleged anticompetitive practices that it says drive up prices and limit consumer choices.
Toronto-based Club Coffee says five other companies – including rival coffee roasters – have joined the complaint that marks a widening of the battle against the Vermont company that controls 90 per cent of the Canadian market for single-serve coffee pods.
Club Coffee's chief executive officer John Pigott said since Keurig lost the patent on the shape of its so-called K Cups in 2012, the company has used other tactics to maintain market dominance, including requiring retailers to sign exclusive deals and telling consumers its coffee machines will not work with rivals' pods.
Keurig and its representatives did not respond to requests for an interview on Wednesday.
Club Coffee, founded in 1906, is owned by privately held food conglomerate Morrison Lamothe Inc. It is Canada's largest roaster and packager of grocery store coffee, and a major supplier to cafes and coffee shops in Canada and the United States.
In an interview, Mr. Pigott said retailers and distributors have told him they cannot sell his coffee for fear of losing the ability to carry Keurig brewers or coffee.
"If you have a cup of coffee with them and try to pitch them, they warn you, this is what's going to happen to me. One [distributor] last week said their price should have been this and now it's this, and that's because he got caught selling our product," Mr. Pigott said. "There is a chill in the marketplace."It's a chill Mr. Pigott said persists even though the pods of Club Coffee and some other companies will work in Keurig machines. Coffee made by Keurig, which recently raised prices by 9 per cent, sells for 40 per cent more than other brands, Mr. Pigott said.
The Competition Bureau complaint mirrors allegations Club Coffee made in a lawsuit filed in September against Keurig in Ontario. None of the allegations have been proven and Keurig has yet to comment or file a statement of defence.
Competition lawyers say it is unusual to file a private civil complaint before formally complaining to the Competition Bureau and to widely publicize the complaint. But there may be a strategy behind the moves, some say, as publicity could persuade some retailers to push back against making exclusive deals with Keurig.
A spokesman for the bureau said it will look into any complaint submitted by six residents, provided they provide enough information to investigate.
Club Coffee has launched a website, freethebeans.ca, which urges consumers to "fight back" against Keurig by sending letters to the Competition Bureau. The company says Keurig's market dominance is stifling innovations like Club Coffee's new coffee pods that are fully compostable.
The single-serve coffee market in Canada has more than doubled since 2012 and the brewers are in almost half of Canadian homes, according to market research consultants Mintel.
Jeff LeDrew, a coffee roaster in St. John's, wants to see his Jumping Bean coffee in Club Coffee's pods on grocery store shelves across Canada. But he fears retailers will refuse to carry his Screech and Deep Water dark roasts because Keurig claims unlicensed cups won't work in its new machines because of proprietary technology.
"The issue is important to me because I can't even get started if consumers are locked down to a sole manufacturer," said Mr. LeDrew, who founded the company in 2005 and sells coffee at several grocery stores in Atlantic Canada, including Costco.
Club Coffee says its pods will work with Keurig machines. The Toronto company says the lids on the Keurig pods have an ink stamp that the machine reads. That stamp has been replicated by other companies, including Club Coffee, which allows their pods to be used in the Keurig machines.