Defendants in a high-profile antitrust lawsuit alleging David Protein acquired alt-fat maker Epogee to “exclude competitors and create an artificial monopoly” have hit back in court papers filed Thursday.
“What plaintiffs are trying to dress up as an antitrust monopolization suit is nothing but a case of bad business planning – failing to secure long term supply contracts for an ingredient that they now say is important to their food business,” argue defendants Linus Technology (trade name: David Protein), Peter Rahal (David cofounder), and Epogee (maker of a novel fat replacer EPG).
The legal dispute began days after David announced the acquisition of Epogee when three food companies who said they could no longer access EPG cried foul, and filed suit in New York.
Plaintiffs OWN Your Hunger, Lighten Up Foods, and Defiant Foods alleged that David violated federal antitrust laws and New York’s Donnelly Act by “orchestrating the acquisition of Epogee through secretive and collusive conduct” and using its “resulting control over EPG to exclude competitors and create an artificial monopoly.”
According to the complaint, “the plaintiffs and numerous other food manufacturers invested hundreds of thousands of dollars in R&D, manufacturing infrastructure, marketing campaigns, and product development specifically tailored to EPG [which looks and behaves like fat but contains a fraction of its calories], reasonably relying on Epogee’s encouragement and assurances of continued access.
“These brands fundamentally restructured their entire business models around EPG as their core competitive advantage and ‘secret sauce’ ingredient, making EPG access essential to their survival.”
‘Plaintiffs want the court to rescue them from a predicament they created for themselves’
In a 30-page memo filed with the court Thursday, however, the defendants say they are “under no obligation” to sell EPG to the plaintiffs. “Epogee has four patents that cover the process for making EPG. It is black letter law that patent holders are not obligated to sell their product to third parties or to license third parties to practice the patent.”
Meanwhile, there is an “abundance” of fats and fat substitutes on the market, add the defendants. “While they claim that they designed their product formulations and manufacturing processes around EPG as a central ingredient, they did not do what most businesses do, particularly when faced with a sole source of supply for a supposedly important ingredient or component – sign a contract.”
Before it bought Epogee, note the defendants, David was a customer of Epogee. “But, unlike plaintiffs, David Protein negotiated a long-term supply agreement to ensure that EPG would be available to it for use in its David protein bars for many years to come. Other Epogee customers did the same thing. These plaintiffs did not.
“Now they want the Court to rescue them from a predicament they created for themselves.”
‘Plaintiffs do not come close to demonstrating unlawful monopolization’
Addressing the antitrust claims, David Protein and Epogee do not have monopoly power in a relevant market, which is an essential requirement for a monopolization claim, says David, which notes that it is a tiny player in the protein bar market, and that Epogee is a tiny player in the fats/fat substitute market. Meanwhile, the plaintiffs, which do not make protein bars, are not direct competitors.
In short, they claim, the plaintiffs’ theory “rests on the tautology that the relevant market should be defined as the market for the one ingredient they want to buy—EPG—and which, by virtue of its patents, only Epogee makes.”
‘Plaintiffs only have themselves to blame for not signing long-term supply agreements’
Epogee, which was not profitable, has now “stopped making money-losing low volume sales to small customers so that they can focus instead on customers with consistent, high-volume demand, which will allow them to spread costs across a larger volume,” add the defendants.
“It is not anticompetitive to change one’s business strategy in hopes of achieving profitability. Quite the opposite – it is pro-competitive for defendants to find a way to operate Epogee profitably and sell EPG not only to enable David Protein to compete with the larger protein bar companies but also to encourage higher volume sales of EPG to third parties for other food products.”
Finally, the plaintiffs have not shown that they have suffered “irreparable harm” claims the defendants, who say that some of Epogee’s other customers have already swapped some of the EPG in their products for other fats or fat substitutes and that plaintiffs “only have themselves to blame for not signing long-term supply agreements.”
They add: “Other food businesses that use EPG as a fat source signed long-term agreements to secure their supply of EPG and will continue to receive that supply.”
‘Systematic supply denial and market manipulation’
According to the plaintiffs, Epogee first started reporting shortages of EPG in March, but told customers that supplies would be available in May. Responses to subsequent inquiries, they claim, were “vague” until May 29, when Epogee said it would no longer accept new orders and was winding down accounts following its acquisition by David.
By effectively stringing them along for a couple of months “during the concealed acquisition period” so that they did not start making alternative arrangements, David and Epogee “created artificial market conditions favorable to monopolization through systematic supply denial and market manipulation,” they allege.
Since March 25, when EPG first became unavailable, the plaintiffs say they have experienced “substantial operational disruptions” and lost sales.
In short, they claim, “The acquisition and subsequent exclusionary conduct constitutes a deliberate bait-and-switch scheme that systematically eliminated the very brands whose substantial investments, innovations, and market development efforts had elevated EPG’s commercial success and market value.
“By pulling the rug from under invested competitors, defendants reaped the benefits of others’ risk-taking and financial commitments while simultaneously destroying the businesses that had propelled EPG’s market acceptance, creating an unconscionable transfer of value from the actual innovators to the strategic acquirer.”
Plaintiffs: ‘David Protein shows disregard for the law’
A representative of the plaintiffs told AgFunderNews: “In 30 pages containing several factual inaccuracies, defendants attempt to skirt the confession their founder made to the media about “taking all the supply” and claim we made bad business decisions.
“Epogee built its entire business on helping entrepreneurs succeed using its “magic” (Peter Rahal’s own word) ingredient before David Protein chose to monopolize that ingredient to prevent “copycats”. This is a disregard for the law that we will defend against in tomorrow’s hearing.”
David cofounder Peter Rahal did not respond to a request for comment.
What is EPG?
To make EPG (esterified propoxylated glycerol), which can be listed on food labels as ‘EPG (modified plant-based oil),’ Epogee splits plant-based oils such as canola into glycerin and fatty acids, inserts a food-grade link, and reconnects them.
As EPG is resistant to lipase, an enzyme that breaks down fat in the body, hardly any of its calories are released. For context, 1g of fat contains 9 calories, while 1g of EPG contains just 0.7 calories.
This proved highly appealing to David, which seeks to reduce the percentage of energy coming from fats and carbohydrates in its protein-fueled bars.
Unlike Olestra, which had a lower melting point (and messy side effects) or fat replacers made from sugars, gums, starches or fibers, EPG functions like fat because it’s made from fat.
*The case is OWN Your Hunger, Lighten Up Foods, and Defiant Foods vs Linus Technology (which operates under the trade name David Protein), Epogee, and Peter Rahal, filed in the Southern District of New York on June 2, 2025. Case: 1:25-cv-04544
