David Protein’s Acquisition of Epogee Faces Legal Challenge in Antitrust Suit

The court overseeing a high-profile lawsuit involving David Protein has denied a request to mandate the company to temporarily resume supplying Epogee’s innovative fat product, EPG, to all former customers. The lawsuit alleges that David Protein’s acquisition of alt-fat maker Epogee aimed to “exclude competitors and create an artificial monopoly.”

Background of the Dispute

The legal proceedings commenced shortly after David Protein revealed its acquisition of Epogee. Three small food companies—OWN Your Hunger, Lighten Up Foods, and Defiant Foods—filed an antitrust suit in New York, asserting that they had heavily invested in developing products around EPG, which mimics the properties of fat but contains significantly fewer calories. Following the acquisition, these companies found themselves unable to source EPG.

The Plaintiffs’ Request

The plaintiffs sought a temporary restraining order to prevent David Protein from “restricting, limiting, or denying access to EPG” for existing customers and other qualified food manufacturers previously reliant on the product. However, Judge Victor Marrero, in a comprehensive 12-page order, dismissed the request.

Judge’s Rationale

In his ruling, Judge Marrero stated that the plaintiffs had “not demonstrated a likelihood of success or serious questions on the merits” of their claims. He noted that the plaintiffs were not direct competitors with David Protein, which primarily manufactures protein bars, while the plaintiffs focus on low-calorie sauces and chocolates.

Further, the judge pointed out that while the plaintiffs defined the relevant market as the U.S. supply of EPG, they later shifted their definition to low-calorie indulgence foods. Judge Marrero highlighted that there are other effective substitutes for EPG that do not infringe its patents.

David Protein’s Defense

In court documents, David Protein asserted that it is “under no obligation” to supply EPG to the plaintiffs, citing four patents held by Epogee for the production process of EPG. The company emphasized that patent holders are not legally required to sell their products to third parties.

Additionally, David Protein pointed out that there are numerous fats and fat substitutes available in the marketplace. They contended that while the plaintiffs based their product formulations on EPG, they failed to secure a long-term supply agreement—a precaution commonly taken by businesses reliant on a single source of supply.

Allegations of Market Manipulation

The plaintiffs accuse David and Epogee of creating an “artificial market condition” through systematic supply denial and market manipulation. They claim that Epogee reported EPG shortages starting in March, misleading clients about the availability of supplies until the acquisition was finalized.

Understanding EPG

EPG, or esterified propoxylated glycerol, is produced by breaking down plant-based oils like canola into glycerin and fatty acids, then recombining them with a food-grade linkage. Due to its unique properties, EPG releases very few calories when processed by the body, making it an attractive ingredient for companies like David Protein that aim to reduce fat and carbohydrate content in their products.

Conclusion

The case, filed under OWN Your Hunger, Lighten Up Foods, and Defiant Foods vs Linus Technology (dba David Protein), Epogee, and Peter Rahal, in the Southern District of New York, is ongoing. The outcome may have significant implications for the market dynamics surrounding fat substitutes and the competitive landscape of the food industry.

Further Reading

• Protein bar maker David acquires novel fat maker Epogee, raises $75m Series A on back of ‘explosive’ growth
• Peter Rahal, David Protein, sued over ‘bait & switch’ scheme to monopolize Epogee’s fat replacer
• David fires back in Epogee lawsuit: ‘Plaintiffs only have themselves to blame for not signing long-term supply agreements’