A FIGHT OVER CHEESECAKE

Implications: When General Growth Properties acquired The Glendale Galleria (along with the rest of the Rouse Company), they set in motion their standard market research methodology to determine future competitive risks for each project.  When they determined that The Glendale Galleria was being threatened by unfair competition that was being subsidized by the City of Glendale, they started to take actions to combat this competition. This article discusses the results of those actions.

Analysis: Admist a flurry of claims and counter claims, the developer of The Grove, Caruso Affiliated Holdings, has just won his lawsuit against General Growth Properties, the current owner of The Glendale Galleria. Mr. Caruso was awarded $74 million in what boils down to a fight over which of the two competing sites The Cheesecake Factory would select for their new restaurant.

As a grizzled veteran of the "Mall Wars", I can attest to the fact that every one of the dozen plus new regional mall developments I have been associated with over my career, has had virtually identical types of competitive pressures from either competing malls or downtown merchants associations. However in today's litigious society where every competitive threat is seen as worthy of court intervention, suddenly General Growth Properties' profits are reduced by .13 cents a share because Mr. Caruso had the presence of mind to run to the courts for protection against the bigger General Growth Properties competitor. 

What formerly was standard operating procedure is now illegal in the eyes of this court. 

When viewed from a world wide business perspective, this decision will have far reaching consequences. Every time a bigger competitor tries to use their clout to compete with a smaller competitor, the smaller one can seek redress from the courts.