Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Pastry equipment maker allegedly engaged in scheme to maintain monopoly, (Sep 23, 2014)

By Linda O’Brien, J.D., LL.M.

A dough forming equipment manufacturer implemented a practice of refusing to deal with customers who had purchased dough forming equipment, parts, or services from any of the manufacturer’s competitors in order to secure and maintain its monopoly power and fix the price of dough forming equipment and parts at supra-competitive levels, according to a complaint filed in the federal district court in White Plains, New York (Savory Pie Guy, LLC v. Comtec Industries, Ltd., September 17, 2014).

Comtec Industries is a leading manufacturer and seller of dough forming equipment (pressing machines) used for making pie crusts and tart shells and has at least a 90 percent market share of the dough forming equipment and supplies market in the United States. Savory Pie Guy, LLC is an entry-level pastry business that makes and sells savory pies to food establishments.

The complaint states that, on two occasions in 2012, Comtec made, sold, and shipped customized die sets to Savory Pie Guy for its pressing machine. On a third occasion, Savory Pie Guy contacted Comtec to purchase additional customized die sets for its pressing machine. When Comtec failed to respond to its multiple requests, Savory Pie Guy contacted machinist Jim Sutton, doing business as Inline Pie and a competitor of Comtec, to manufacture the desired die sets.

In October 2013, Savory Pie Guy’s owner, Sean Mandel, attended a baking industry exposition and observed Comtec’s new semi-automatic pressing machine on display. At the display, Mandel asked Comtec’s president, Jim Reilly, if his existing die sets purchased from Comtec and those from Inline Pie would work in the new pressing machine. Reilly assured Mandel that the sets would work in the new machine with some modifications, according to the complaint.

The complaint alleged that Savory Pie Guy requested from Comtec a written quote for the purchase of one of the new pressing machines. Subsequently, Comtec notified Mandel that it learned that Savory Pie Guy was using a Comtec press with parts that were not manufactured by Comtec and therefore considered the pressing machine unsafe. As a result, Comtec refused to provide any equipment, parts, or service to Mandel or his business in the future.

Comtec’s assertion that the plaintiff’s pressing machine was “unsafe” was meritless, the plaintiff charged. It is common practice in other industries for machinists to produce parts and service machines that the machinist did not create. Comtec’s refusal to deal with Savory Pie Guy reduced the value of its pressing machine to zero, since it cannot buy customized dies from Comtec, use Comtec to service or repair the machine, or even sell the machine without Comtec’s ban applying to any subsequent purchaser, the complaint alleges.

There was no objective or pro-competitive justification for the defendant’s conduct. Comtec engaged in its unlawful policies for the purpose of restricting competition, maintaining its monopoly market share, and controlling prices in the dough forming equipment market. The scheme has effectively prevented competition and allowed Comtec to maintain the supra-competitive prices it charges for dough forming equipment, parts, and services.

The plaintiff asserts claims for monopolization, attempted monopolization, and violations of Section 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 7:14-cv-07527-VB.

Attorneys: Seth A. Safier, Adam J. Gutride, Marie A. McCrary, and Ashley Salisbury (Gutride Safier LLP) for Savory Pie Guy, LLC.

Companies: Savory Pie Guy, LLC; Comtec Industries, Ltd.

News: Antitrust NewYorkNews