Pepsi Sues Coke Over Powerade Ad

PepsiCo Inc. (PEP) is taking on Coca-Cola Co. (KO) in federal court here, but this time it's not a cola war.

PepsiCo's Gatorade beverage business filed a lawsuit Monday in U.S. District Court against Coca-Cola's Powerade unit to stop an ad campaign that it claims is false and deceptive.

A new television ad for Coke's Powerade Option sports drink features a "drag race" between two farmers in Amish dress, riding horse-drawn carts loaded with hay bales — one with ten bales and one with 50. The ad shows the cart with fewer bales easily cruising to victory, and touts that Powerade Option has 10 calories compared to Gatorade's 50 calories.

"In other words, Coca-Cola is telling consumers that Powerade Option's fewer calories literally make you go faster. However, Coca-Cola cannot possibly substantiate this overall superiority claim," the suit says.

Powerade Option, which contains "negligible calories, cannot refuel athletes in a similar manner" as Gatorade, the court filing claims.

The suit seeks a permanent injunction to bar Coke from running the ads, which were launched last week during the start of the NCAA men's basketball tournament.

Coca-Cola spokesman Dan Schafer said Tuesday that the Powerade Option ads are truthful and that Gatorade has no research to prove its allegations. "Our advertising tells the truth, and we stand by it," Schafer said.

Gatorade's lawsuit says that the National Advertising Division of the Better Business Bureau last year decided that Coca-Cola could compare Powerade Option to Gatorade only if it discloses that "consumers will not receive the energy replacement benefits provided by Gatorade."

Coca-Cola "apparently changed its mind when it decided to launch its new television campaign," the suit says.

Schafer said the ads fulfill Coke's agreement with the NAD.