A Montana-based bakery-café chain filed a Federal Trade Commission objection this week that questions the potential “anticompetitive effects” of the sale of Panera Bread Co. to JAB Holding Co.
Dillon, Mont.-based Great Harvest Bread Co., which has 196 units nationwide, claims the proposed merger puts its franchisees at competitive risk, especially in coffee programs, and could also be affected by a pending trademark infringement lawsuit that began in March 2016.
JAB Holding, owner of coffee and breakfast concepts, agreed in April to pay $7.5 billion for St. Louis-based Panera Bread Co., which has 2,042 bakery-cafés in the United States and Canada. A closing date on the deal has not been announced.
A Panera Bread spokesman said Wednesday that the company does not comment on legal matters.
Eric Keshin, president of Great Harvest, told Nation’s Restaurant News on Tuesday that his company filed for a “Bread. The Way It Ought to Be” trademark in October 2014, and Panera Bread launched an advertising campaign in June 2015 with the tag, “Panera Bread, Food the Way It Should Be.”
“I spent 30 years in the advertising industry, and the rule of thumb in trademark infringement from the consumers’ perspective is: Is it confusingly similar?” Keshin said. “We believe it was, so we asked for a cease and desist and didn’t get a response.”
Great Harvest filed a federal trademark infringement lawsuit in March 2016, in the Western District of North Carolina.
“It’s been making its way through the legal process,” Keshin said.
Depositions have been requested, but no rulings have been issued and required mediation is approaching, he said.
Great Harvest filed the Federal Trade Commission claim under the Hart-Scott-Rodino Antitrust Improvement Act’s pre-merger notification program.
The FTC complaint notes that JAB owns Peet’s Coffee & Tea, a product used by “a significant number of Great Harvest’s franchisees.”
“We are concerned that after the proposed merger, the benefit of being a Peet’s coffee partner will be eliminated,” wrote Charles Monk II, lawyer for Great Harvest, in the complaint. “JAB will have the opportunity to remove the benefit of that relationship from Great Harvest stores so that its competing Panera stores get the benefit of that trade.”
The Peet’s brewed coffee program is highly selective, Keshin said. Given that JAB owns Peet’s, Keshin said Great Harvest’s competitive advantage could be at risk.
“They could turn around and tell us they would no longer offer the Peet’s program because they own Panera,” Keshin said.
In the complaint, Great Harvest also references its history with Panera and the trademark infringement suit.
“Great Harvest is concerned with the detrimental impact on competition if this merger proceeds; and, that it is even more unfair given the prior conduct of Panera in using the registered intellectual property rights taken from Great Harvest. …”
Keshin said it is up the FTC and the Justice Department to examine the proposed sale.
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Correction April 27, 2017: This story has been edited to correct year of Panera ad campaign and clarify deposition status.