Penny Stafford, the owner of Belvi Coffee and Tea Exchange, located in Bellevue,

Question

Penny Stafford, the owner of Belvi Coffee and Tea Exchange, located in Bellevue, Washington, brought an antitrust suit against Starbucks. She alleged that through its exclusive leases, Starbucks bans other coffee shops from competing. Starbucks has a 73 percent market share, has $8.4 billion in annual sales in the United States, and owns 7,551 of the 21,400 coffeehouses located in the United States. However, if Dunkin’ Donuts, Krispy Kreme, and Tim Hortons are included in the gourmet coffee market, Starbucks holds only 43 percent of the coffee market. Starbucks purchased Seattle’s Best Coffee (SBC) in 2003 and Torrefazione Italia the same year. Starbucks then closed one-half of all SBC stores and all of the Torrefazione outlets. Starbucks runs 59 stores within a two-mile radius of downtown Seattle. Stafford said that Starbucks has exclusive leases with landlords so that the landlords cannot lease space in the same building to another coffee shop. Does such an exclusive lease violate any antitrust laws, or are such clauses permitted under the law?

Explanation / Answer

Yes it does violate antitrust law about market allocation, Starbucks created a monopoly and people like Penny who don’t have enough money to open a new coffee shop every 2 blocks can’t compete with that.

Starbucks put out of business many other coffee shops not only on Seattle but around the world,

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