Coke Can Launch Monster Energy Rival, Arbitrator Rules

By Dave Sebastian and Jennifer Maloney 

Coca-Cola Co. won an arbitration claim against Monster Beverage Corp., clearing Coca-Cola's way to sell its own energy drink.

Monster had accused Coca-Cola of violating a noncompete agreement the companies struck in 2015. The two companies filed their dispute before the American Arbitration Association in October 2018.

The arbitration ruled Monday that Coca-Cola is able to market the energy drink, including in areas where it has already been launched as well as in additional global markets.

Shares of Monster fell 2.7% in premarket trading, while shares of Coca-Cola were up 0.7%.

In 2015, Coke bought a 16.7% stake in Monster and agreed to distribute the company's energy drinks in the U.S. and Canada. It later expanded the agreement to include distribution in other markets overseas. Coke also transferred ownership of its energy drinks business, including NOS and Full Throttle, to Monster.

The deal bars the soda giant from distributing competitive energy drinks but includes an exception for products marketed under the Coca-Cola brand. The arbitrators ruled June 28 that Coca-Cola Energy products are an exemption to the noncompete provision, as it is marketed under the Coca-Cola brand.

"The companies respect the arbitrators' decision and appreciate that the dispute was resolved amicably," Coca-Cola and Monster said in a joint statement. "While there was a disagreement between Coca-Cola and Monster over contractual language, the companies value their relationship and look forward to their continued partnership."

A Coca-Cola spokesman declined to comment on the company's plans to launch the energy drink in the U.S.

The energy drink, as well as its diet version called Coca-Cola Energy No Sugar, would consist of caffeine from naturally derived sources and guarana extract.

Write to Jennifer Maloney at [e-mail]

(END) Dow Jones Newswires

July 01, 2019 09:58 ET (13:58 GMT)

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