May 16 (NBD) -- China's coffee start-up Luckin Coffee accused U.S. coffee chain Starbucks of monopolistic practice in China and will file a lawsuit against the Seattle-based coffee brand.

In an open letter released on Tuesday by Luckin, the company explained that Starbucks has signed exclusive contracts with many property management companies in China and forced suppliers to take sides.

This will become the first antitrust lawsuit for Starbucks if the case was placed on file.

Guo Jin, vice president of Luckin, told NBD that some of our partners have stopped providing products to Luckin and the property owners can't rent the spare pavements to us because of the contract with Starbucks.

Apart from Luckin, a number of domestic coffee chain brands, shops whose 30 percent of total revenue coming from the coffee sales, and even those stores with the name relevant to coffee are included in Starbucks' exclusivity clauses as well.

Starbucks now is at dominant position in China's coffee service market especially in the coffee chain service one, according to the Anti-Monopoly Law of China.

Statistics from market research institution Euromonitor International show that in 2017, the U.S. coffee chain grew to 58.6 percent of domestic coffee service market from 57.5 percent in 2016, and its shares in the coffee chain service market even reached a whopping 80.7 percent, compared to 2016's 78.8 percent.

Starbucks are rejecting all competitors by setting exclusivity clauses and the rules in the contract are made not to generally restrain competition, but to eliminate it, said Li Zhongsheng, attorney of Luckin Coffee and co-partner of law firm King & Wood Mallesons.

Luckin's new move has triggered heated discussion in the industry.

Though the company was suspected of conducting marketing hype, some insiders regarded the case as a breakthrough for Chinese new retail coffee brands.

It is difficult for coffee shops to survive in China. In 2016, the coffee stores amounted to about 100,000, while over 14,000 stores were closed through the year, with a net closure rate of 14 percent, research data from drink service provider Ka Men and group buying platform Meituan Dianping said. Foreign coffee brands including Korean ones also failed during the competition.

Thus, it is even harder to challenge Starbucks. Though insiders believed Luckin's letter is a way of promotion, it is still a practical method to actively fight with industry giant. Luckin's move will help the market create a fair competitive environment.

Since launching of trial operation about four months ago, Luckin Coffee has served 1.3 million customers with 5 million cups of coffee. It is targeting the young generation of white collars, offering cheaper coffee with taste optimized for Chinese consumers.

Email: zhanglingxiao@nbd.com.cn