Supreme Court Rejects Herbal Tea Controversy

The Supreme Court today turned its back on a still-brewing tempest over America’s multimillion-dollar herbal tea market.

The justices, without comment, refused to take up an antitrust controversy stemming from the once-planned acquisition by Thomas J. Lipton Inc. of Kraft’s Celestial Seasonings Inc.

The case dates back to 1987, when Lipton, a subsidiary of the huge grocery products distributor Unilever, announced that it had agreed to buy Celestial Seasonings from Kraft Inc.

Celestial is the largest U.S. producer of herbal teas, accounting for 52% of all sales. Lipton controls the second-largest herbal tea market share, 32%.

After it became clear that the Federal Trade Commission was not going to challenge the purchase, competitor R. C. Bigelow Inc. sued in federal court to stop it. Bigelow, a family-owned business based in Norwalk, Conn., accounts for about 13% of the herbal tea market’s sales.

Suit Cited Monopoly

Its lawsuit contended that the merger of Lipton and Celestial would create a monopoly that would hurt Bigelow’s chances of competing effectively in selling herbal teas.

U.S. District Judge Jose A. Cabranes in New Haven, Conn., threw out the suit, ruling that Bigelow had not proved that the merger would result in predatory pricing or any other antitrust law violation.

But the U.S. 2nd Circuit Court of Appeals last Jan. 17 reinstated the suit. It said the fact that Lipton would have an 84% share of the herbal tea market after purchasing Celestial “constitutes sufficient evidence, in and of itself, of antitrust injury to a competitor to create a genuine issue for trial.”

Kraft canceled the proposed sale in September, 1988.