Kensington Antitrust Advisors Group

In Burda et al. v. Wendy’s International Inc. et al., Southern District of Ohio Judge George C. Smith has denied a bid  by Wendy’s International Inc. to dismiss a lawsuit brought by a franchisee accusing the fast food giant of violating federal antitrust and state breach of contract laws by forcing him to purchase hamburger buns and food supplies from two company-approved vendors, which created an illegal tying arrangement between Wendy’s and its’ subsidiary New Bakery, a bun supplier. In its motion to dismiss Wendy’s argued that 1) Burda’s complaint lacked merit because he failed to adequately prove that the restaurant chain had market power; 2) obligation to buy products from certain vendors was actually a contractual agreement; and 3) the statute of limitations had run out.  Judge Smith rejected these arguments and held that 1) plaintiff had sufficiently alleged market power in the tying products through a lock-in theory of antitrust; 2) the restaurant’s original franchise agreement did not warn plaintiff that defendants would be able to eliminate all competition by naming an exclusive supplier or that they could impose a surcharge on approved suppliers, Wendy’s changed the terms of that original contract when it restricted competition; and 3) under the Clayton Act, plaintiff had four years to file an action after termination, and plaintiff’s eligible time frame to bring suit started when Wendy’s terminated his contract in August 2007.