After hearing arguments and testimony for three weeks, a federal jury deliberated about an hour before dismissing an antitrust suit brought by Allegheny Pepsi-Cola Bottling Co. against the Richmond-based Coca-Cola Co. franchise.
Allegheny Pepsi, a unit of Baltimore-based Allegheny Beverage Corp., had charged in U.S. District Court that Atlanta-based Coca-Cola Co. conspired with other corporate giants in bankrolling a dummy corporation to underprice Pepsi and drain its share of the regional market.
Allegheny said today it would appeal the Monday verdict, maintaining the jury had been "significantly influenced by erroneous rulings of the court made during the course of the proceedings, including rulings that prevented Allegheny Pepsi from presenting to the jury critical evidence supporting Allegheny Pepsi's contentions in the lawsuit."
Seeking $65 million in damages, Allegheny introduced into evidence several memoranda obtained during pretrial discovery that purportedly revealed a secret plan to keep the franchise, Mid-Atlantic Bottling Co., in Coca-Cola's control. Mid-Atlantic was created by combining the J. E. Crass Bottling Companies and Coca-Cola's subsidiary, the Coca-Cola Bottling Co. of Baltimore.
Principal investors in the $158 million transaction were the Prudential Insurance Co. and the Teachers Insurance and Annuities Association. Allegheny alleged the memoranda detailed a scheme between Coca-Cola and Citicorp Venture Capital, which coordinated the deal.
Donald R. Keough, president of Coca-Cola Co., testified last week that the company had legitimate business reasons for backing what has been portrayed as a sweetheart deal for Mid-Atlantic. Coca-Cola provided a multimillion-dollar loan with no interest payment for three years and no payment on the principal for 10 years, and received only a junior subordinated note. Coca-Cola did receive, however, a first right of refusal on prospective purchasers of Mid-Atlantic.
Keough testified that the company feared Crass would be purchased by Northwest Industries Inc., which owns the largest independent Coca-Cola bottler in Los Angeles.