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Nestlé offered stores financial incentives to stop carrying rival's products, claims lawsuit

Nestlé Waters North America engaged in ‘deceptive, fraudulent and predatory behavior’ says Nirvana Inc in unfair competition lawsuit

3 comments

By Elaine Watson+

21-Aug-2014
Last updated on 21-Aug-2014 at 16:40 GMT

2011-12 takeover talks were a 'ruse to get access to Nirvana's confidential information' claims bottled water co.
2011-12 takeover talks were a 'ruse to get access to Nirvana's confidential information' claims bottled water co.

Nestlé Waters North America engaged in “deceptive, fraudulent and predatory behavior” in a bid to drive a small competitor out of business, alleges New York-based Nirvana Inc in a lawsuit accusing the world’s biggest bottled water company of illegal anti-competitive practices.

The lawsuit - which echoes a complaint filed against Nestlé by ice cream maker Clemmy’s (click HERE ) - alleges that Nestlé Waters NA offered retailers financial incentives to stop carrying Nirvana bottled water products and broke a non-disclosure agreement by sharing confidential information about the smaller firm with trading partners.

In a complaint* filed in New York on Wednesday (August 20), Nirvana Inc claims that relations with Nestlé soured in 2011 after it switched its strategy from primarily co-packing other firms’ bottled water brands and launched its own branded products, which started taking market share from Nestlé Waters' brands Poland Spring and Deer Park.

Takeover approach a ‘ruse to get access to Nirvana's confidential information’, alleges NY-based bottled water co

Shortly afterwards, alleges Nirvana Inc, Nestlé approached it about a takeover, and in February 2012, signed a Non-disclosure Agreement (NDA) as the talks involved the exchange of sensitive information including financial records and projections.

But this was merely a “ruse to get access to Nirvana's confidential information”, claims Nirvana, which alleges that Nestlé broke the NDA by telling wholesale purchasers that Nirvana was up for sale and in financial trouble.

Defendants acted with specific intent to exclude competition in the relevant market

Nestlé then brought several supermarkets a letter showing that Nirvana was approaching Nestlé about selling out, and offered firms including Stew Leonard's and A&P financial incentives to stop carrying Nirvana products, alleges the lawsuit.

Lawsuit: 'Defendant [Nestlé Waters North America] pursued its anti-competition goal of restraining trade, and putting Nirvana out of business, by means of unfair and improper tactics, in order to substantially lessen competition in the relevant market'

“When Nestlé learned that Nirvana was attempting to secure a new customer. Nestlé would offer that buyer a better price on its water in exchange for not carrying Nirvana. Defendant engaged in predatory and/or anti-competitive conduct.  

“Defendants acted with specific intent to exclude competition in the relevant market. Defendant pursued its anti-competition goal of restraining trade, and putting Nirvana out of business, by means of unfair and improper tactics, in order to substantially lessen competition in the relevant market.”

Remsen, NY-based attorney Richard Pertz , who is representing Nirvana, said Nirvana had suffered as a direct result of Nestlé's allegedly anti-competitive behavior.

He added: “Anti-competitive practices have real victims. When a big company strangles a small competitor, it doesn’t just hurt consumers, it costs people their jobs and sends shockwaves throughout a community.”

Asked by FoodNavigator-USA this morning about why Nirvana had decided to take action given the costs and challenges associated with legal action against a company the size of Nestlé, he added:"The risk in front of us is not as significant as the harm that has already been accrued and will continue to be accrued by Nirvana owing to Nestlé's actions."

While much of the evidence will be in the form of oral statements from buyers that were purchasing Nirvana products and subsequently changed their programs, there were also written statements showing that Nestlé "did show some materials that ought not to have been disclosed", he claimed.

Nestlé Waters North America: We plan to defend ourselves vigorously

Jane Lazgin, director of media and corporate communications at Nestlé Waters North America told FoodNavigator-USA: “We’ve not received a copy of the filing. We intend to review it closely, once it is received. We’ve seen the press release.  If the claims are what the press release states, there is no merit to the claims, and we plan to defend ourselves vigorously.

Founded in 1998 in Forestport, New York, Nirvana Inc bottles its water at source from an Ordovician aquifer in the foothills of the Adirondack Mountains. The company says it is capable of bottling 25 million cases per year and employs between 100-150 people.  

*The case is Nirvana Inc v Nestlé Waters North America Inc, filed in New York State Supreme Court (CA2014-001807). The causes of action cited in the complaint include unfair competition, breach of contract, and tortious interference with contractual relations and prospective business relations. 

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3 comments

THIS MIGHT BE A START..................

Great, glad to see that someone else has the guts to stand up to Nestle. Our Lawsuit continues (Clemmy's v Nestle) for Anti Trust Violations, Unfair Business Practices etc........... Maybe some of the medium size companies that have been complaining about Nestle for years will finally stand up and be counted. You know who you are, the Food Industry needs to be fixed in favor of the Consumer. Please don't be intimidated by their tactics, stick to your beliefs and stay the course.

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Posted by Jon Gordon
22 August 2014 | 07h24

All the large public beverage companies engage in this behavior

Try to compete in the csd business or juice business against the leaders in red and blue.... 90 percent of space in retailers is paid for so non selling brands can take space away from small companies. Do too well as we did in military exchange and they have a political Lobbyist tell the buyer to kick you out. The lobbyist is a retired General.
Not what soldiers want. Not what is best product. But who owns the account .... Big companies own most.retailers through Crony capitalism.
Slotting fees are another bs defensive move encouraged by companies that have multiples of earnings because of the sale of public stock. Other people's money.
Just the way the crooked world works.

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Posted by Darrell
21 August 2014 | 18h35

Gotta love big business

This is what all the big businesses do - not really a surprise. Its hard to even find a real product from a small business, half the time they are secretly owned by a big player. My local brewery just sold out to Budweiser so I can't even buy them anymore - they will just water it down and ruin it.

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Posted by Len Davis
21 August 2014 | 18h27

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