FTC May Block 2 Cola Deals, Sources Say

The Federal Trade Commission will vote Friday on whether to block separate merger proposals by Coca-Cola Co. and Pepsico that would leave those two companies with more than 80% of the nation’s soft-drink market, sources said.

A brief announcement about the meeting indicated that, at this point, the FTC staff would recommend legal action to block both proposed mergers because of their impact on competition in the soft-drink market, according to attorneys involved with the merger proposals.

However, the staff position is not final, sources said.

Dr Pepper, Seven-Up

Coca-Cola, the industry leader, has proposed to acquire Dr Pepper Co., the No. 4 firm, for $470 million. Pepsico, Coke’s close rival, wants to buy Seven-Up, the third-largest soft-drink manufacturer, for $380 million.

Both the staff’s recommendation and the FTC commissioners’ positions on the mergers are subjects of intense speculation. The soft-drink cases are the most important merger decisions to reach the FTC during the Reagan Administration.

The announcement of the June 20 meeting did not name either of the companies or specify what the commission will be voting on. But attorneys said they knew of no other merger cases ready for commission action on the 20th.

Under the FTC’s timetable for reviewing mergers, it has until the end of next week to pass judgment on the proposed merger of Pepsi and Seven-Up, lawyers said.

Royal Crown Campaign

Daniel Oliver, the new FTC chairman, is leaving after the meeting for an antitrust conference in Europe. Thus, if he is to vote on the Pepsi proposal before it takes effect, that vote will have to come at Friday’s meeting, attorneys said.

The deadline for considering the Coca-Cola merger proposal comes a few days after the Pepsi deadline.

Royal Crown Cola Co. began a campaign last Thursday to stir up opposition to the Coca-Cola and Pepsi mergers, running full-page advertisements in six major newspapers.

Royal Crown charged that the increased market concentration resulting from the mergers would limit choices of soft drinks, put some independent bottlers out of business and permit Coke and Pepsi to raise prices. Royal Crown has about 5% of the soft-drink market.

Coca-Cola spokesman Ron Coleman responded that the proposed acquisition of Dr Pepper “violates no antitrust law, is pro-consumer, and (Coca-Cola) trusts that the Federal Trade Commission will agree.”