Starbucks Accused of Abusing Monopoly Power in Violation of Sherman Act

Seattle coffee-house files suit which could have impact nationally

September 25, 2006

SEATTLE - An independent specialty coffeehouse owner filed a proposed class action lawsuit today against Starbucks Corporation (NYSE:SBUX), claiming the company, from its monopoly position in the specialty coffee market, engages in a range of anti-competitive activities aimed at eliminating competition.

Filed in U.S. District Court, the suit alleges that Starbucks has exploited its monopoly power in the specialty coffee retail market to stifle competition through a series of predatory practices including exclusive lease agreements, "cluster bombing" of stores and competitor buy-outs.

Among the allegations leveled in the complaint, Penny Stafford - an independent coffee-shop operator - claims that Starbucks locks out competition through a series of exclusive lease agreements with property managers of Class A high-rises, preventing other specialty coffee shops from operating in the same building.

In this practice, Starbucks frequently offers to make lease payments higher than fair market value in exchange for a property owner's agreement to prevent competitors from leasing space in the same building, the complaint says.

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