Panera Competitor Raises Objection with FTC
St. Louis, MO/April 28, 2017 (STLRestaurant.News) – Just about the time it seems the sale of St. Louis-based Panera Bread is imminent, something gives us pause. First it was news that the Warren Buffett-backed private equity firm 3G Capital was exploring a possible counter offer for the quick-service chain. The Brazil-based 3G owns Burger King and Tim Hortons. Now it seems that a Panera competitor is crying foul. Great Harvest Bread Company, based in Dillon, Montana, has filed an objection to the sale with the U.S. Federal Trade Commission (FTC).
Great Harvest Bread operates bakery-cafes similar to Panera’s and is a direct competitor. There are three Great Harvest bakery-cafes in the St. Louis area, and nearly 200 across the U.S. Panera has more than 2,000 locations nationwide. The two companies are already embroiled in a trademark infringement lawsuit filed in March 2016 by Great Harvest against Panera Bread. In that suit, Great Harvest claims Panera’s slogan, “Food as it Should Be,” is too much like their slogan, “Bread. The way it ought to be.” The suit claims Panera began using their slogan in an advertising campaign launched in June 2015. Great Harvest had filed to trademark their slogan in October 2014. One of the issues raised in Great Harvest’s FTC filing is this unsettled trademark suit because the impending $7.5 Billion sale to JAB Holding Company includes the purchase of the disputed trademark.
Another concern raised in Great Harvest’s FTC filing is the issue of monopoly. Great Harvest Bread, which specializes in breakfast, is arguing that JAB’s acquisition of Panera would give them a near-monopoly on the breakfast industry and thus, an unfair advantage. Luxembourg-based JAB also owns Krispy Kreme Doughnuts, along with Keurig Green Mountain, Caribou Coffee, and Peet’s Coffee & Tea.
A third issue raised by Great Harvest’s FTC complaint revolves around an arrangement already in place that allows Great Harvest cafes to serve Peet’s Coffee products. Their concerned that if Peet’s parent company JAB buys Great Harvest’s chief competitor, it could interfere with that preexisting coffee vending agreement.
Great Harvest filed its FTC complaint under the Hart-Scott-Rodino Antitrust Improvement Act of 1976. The HSR Act premerger notification program requires both Panera and JAB to make detailed filings with the FTC and the U.S. Department of Justice, then wait for those agencies to determine that the transaction will not adversely affect U.S. commerce under the antitrust laws. Panera entered into a definitive merger agreement with JAB on April 5, 2017 under which JAB will pay about $7.5 billion to acquire Panera Bread and assume it’s debts. If the deal passes federal antitrust examination, the merger is expected to close over the summer (third quarter of 2017).