Utah Pretzel Maker Sues Competitor Under Antitrust Laws

On February 19, 2014, the Utah ready-made soft pretzel maker, Sparky’s Pretzel, filed an antitrust complaint against Utah Pretzel and Valley Fair Mall, asserting that the two defendants are colluding to keep it out of the northern Utah ready-made pretzel market.

According to Sparky’s Pretzel, its long-running tenancy in Valley Fair Mall, beginning in 2004, ended in 2010 after the mall’s operators conditioned the renewal of the lease on it to stop selling pretzels or pretzel-related products, to stop offering food or drink items present on or associated with Sparky’s menu, and to change its name and relocate to another location in an undeveloped corridor of Valley Fair Mall. At the same time, Sparky’s Pretzel approached every other mall in Davis, Utah, Salt Lake and Weber counties for an alternative space, but were faced with the same demands as those made by the Valley Fair Mall.  All of the malls that Sparky’s Pretzel made contact with also hosted stores of Utah Pretzel.  Utah Pretzel subsequently moved into Valley Fair Mall soon after Sparky’s Pretzel vacated its location on July 25, 2010.  Sparky’s Pretzel argues that Utah Pretzel and Valley Fair Mall conspired in early 2010 to keep it, Utah Pretzel’s only significant competitor in the northern Utah market, from doing business in the Valley Fair Mall, despite the fact that Sparky’s Pretzel was already very close to signing a long-term contract renewal with Valley Fair Mall’s management.

Sparky’s Pretzel’s complaint to the U.S. District Court for the District of Utah alleges that there exists a distinct ready-made pretzel market and that few substitutes to ready-made pretzels are available to consumers, making the demand for ready-made pretzels inelastic.  Utah Pretzel, as the exclusive vendor of ready-made pretzel in Davis, and SaltLake counties except for a single shop in Salt Lake City’s airport, already controls 92% of the ready-made pretzel market in Utah.

Sparky’s Pretzel believes Utah Pretzel negotiated anticompetitive clauses with local malls that bar competition in locations where it has opened shop.  Therefore, Sparky’s Pretzel believes the actions of Utah Pretzel amounts to a monopolization of the northern Utah pretzel market, and construes an unreasonable restraint on trade.  Sparky’s Pretzel seeks to recover treble damages from Utah Pretzel and Valley Fair Mall, jointly and severally, for their alleged violations of the Sherman Act and treble the amount of damages sustained pursuant to of the Clayton Act.  Sparky’s Pretzel is also looking to recover its costs of suit, including reasonable attorneys’ fees.  Finally, Sparky’s Pretzel asked the court to enjoin Utah Pretzel and Valley Fair Mall from barring entry into the relevant marketplaces.

Andre Barlow
202-589-1838
abarlow@dbmlawgroup.com

Mark Ye
202-589-1834
mye@dbmlawgroup.com