Shoppers at the Food 4 Less in Highland Park would seem to be spoiled for choice when it comes to tortillas.
The shelves are jammed with more than two dozen varieties, from miniature corn disks to cradle a few morsels of carne asada to placemat-sized flour wrappers for molding monster burritos.
But what appear to be competing products are really the handiwork of a single company: Gruma. The Mexican giant dominates America's packaged tortilla trade through its U.S. subsidiary Gruma Corp., whose stable of brands includes the Mission, Guerrero and Buena Comida labels found at Food 4 Less and other supermarkets.
And that has Los Angeles tortilla maker Philip Manly steaming like a vat of fresh-cooked corn dough. He and other manufacturers say Gruma broke the law to wrap up its daunting market share, allegedly paying retailers hefty fees to grab prime shelf space and eliminate competing products. A trial is set to open today in federal court in Houston in a lawsuit that claims Gruma violated antitrust laws. The suit seeks $70 million in damages.
"This is war," said Manly, owner and general manager of El Dorado Mexican Food Products, one of eight California tortilla makers among the 18 plaintiffs; the others are from Texas, Arizona and Michigan. "If I go down, I'm going down swinging."
The case is notable because relatively few small businesses have mounted legal challenges to the so-called slotting fees some producers pay to retailers. Introduced decades ago by supermarkets to cover the cost of adding new products to their lineups, the fees have morphed into a complex and shadowy system of selling shelf space--a practice that may or may not be legal depending on how the deals are structured.
The suit doesn't provide details of the alleged slotting deals between Gruma and the supermarkets, none of which were named, that supposedly gave Gruma products superior treatment. Nor does it specify how much money allegedly changed hands. Gruma's attorney, Gregory Huffman, declined to discuss the company's slotting arrangement with supermarkets and said his client was innocent of wrongdoing. Officials of publicly owned Gruma, based in Monterrey, Mexico, declined to be interviewed about the lawsuit, and supermarket executives wouldn't comment on the slotting fee system.
The plaintiffs are represented by Thomas Stanley, who recently won a $14-million judgment against Coca-Cola Co. on behalf of five independent soft-drink bottlers in Texas, Arkansas and Louisiana over anti-competitive practices similar to those alleged in the Gruma case.
