Powerade Distribution Case in Motion

Coca-Cola, CCE seek to dismiss lawsuit

ATLANTA -- The Coca-Cola Co. and Coca-Cola Enterprises (CCE) on Tuesday filed separate motions to dismiss a lawsuit attempting to block CCE from testing warehouse delivery of Powerade to a customer within its exclusive territory.

The core issue here is an attempt by one group of bottlers to block another group of bottlers from making a change to better serve customers and consumers. Our Powerade contract clearly allows a bottler to choose warehouse delivery in its own territory, said Don Knauss, president of Coca-Cola North America. This is a question [image-nocss] of how our system creates growth by serving our customers and consumers; it is not a legal issue.

He added, We have had a deep and mutually beneficial relationship with our bottlers for more than 100 years. One of the historic strengths of our system has been its ability to change and adapt as our consumers, customers and competitors have changed. Change today is coming more rapidly than ever, and if we aren't willing to consider change, we risk missing out on growth.

In its filing, the company notes three flaws in the lawsuit, whichas reported in CSP Daily Newshas been filed by small bottlers representing just over 5% of the company's U.S. volume. First, the Powerade contract clearly allows a bottler to choose warehouse delivery within its exclusive territory. Second, each bottler operates under an individual Powerade contract for its territory and cannot limit what another bottler chooses to do within its separate territory. And third, several of the plaintiff bottlers do not have a written Powerade contract, so they cannot be a part of a lawsuit over that contract.

In its filing, CCE notes that because none of the plaintiff bottlers are party to its contract with the company, they have no right to dictate how CCE conducts its business within its territory.

Last Friday, Coca-Cola Bottling Co. Consolidated, the second largest bottler in North America, filed a motion to intervene in the lawsuit, saying that it plans to test warehouse delivery of Powerade within its territory and objecting to these plaintiffs' attempts to stop the test. In addition, Sacramento Coca-Cola Bottling Co., one of the largest of the plaintiff bottlers, withdrew from the suit.

A hearing on the lawsuit is scheduled for March 29 and 30.