Dive Brief:

• Discount grocer Aldi has brought a lawsuit against Lidl U.S. and two former Aldi employees, one of which now works for Lidl, alleging that the former employees stole proprietary information regarding its expansion plans and shared it with Lidl. The lawsuit was filed Friday in the U.S. District Court for the Eastern District of North Carolina.
• At the center of the suit is former Aldi employee Bruna Maraccini, who held various roles during her 11-year employment with Aldi, according to the 35-page complaint. Maraccini is now director of real estate for Lidl's North Carolina region, according to an article in the Charlotte Business Journal.
• Aldi alleges that Maraccini was offered a severance package in exchange for confidentiality, a non-solicitation agreement and a nine-month noncompete pledge when she left the company last March. The company also said that Maraccini violated the terms when she was hired to work for Lidl last October. The other employee named in the suit, Colleen Savory, is set to begin working for Lidl in the coming weeks, according to the complaint.

Insight:

The already hot competition between Aldi and Lidl has intensified as the companies prepare to head to court, showing just how serious the grocery wars have become between rivals. Aldi and Lidl have been going head-to-head in the U.S. for the past few years, and while Aldi has a far larger footprint with more than 1,800 stores in 35 states and continues its rapid expansion, Lidl has made big gains in recent months. In November, Lidl acquired 27 Best Market stores in New York and New Jersey to boost its presence in the Northeast. 

But employees sharing trade secrets takes the competition too far, and Aldi's lawsuit is a wake-up call to Lidl, and other grocers, that the company will go to great lengths to protect its investments in the U.S.

In its complaint, Aldi said that it spends billions of dollars per year investing and implementing its real estate and operations strategies and plans, with a five-year, $5.3 billion dollar plan to remodel existing stores and open new ones announced in 2017. "The locations of Aldi's planned stores are not publicly known, and Aldi does not disclose that information outside of those employees within Aldi who have a specific business need to know that information," Aldi stated in its lawsuit.

Lidl, which has had some hurdles in getting its U.S. grocery business off the ground, has faced previous criticism for its real estate strategy, with experts noting the retailer's poor choice of store locations. Lidl now, however, is poised for major expansion in the states and recently hired a new chairman for its U.S. business. Notably, the new chairman worked for Aldi until 2017.

If the complaints cited on Aldi's lawsuit are accurate, it's possible that some of Lidl’s new store plans are being determined based on Aldi’s leaked expansion plans. Lidl has shown increased emphasis in North Carolina in particular, one of Aldi’s strongholds, with several stores popping up in the state in recent months.

This is not the first time Lidl has been sued by a competitor in the U.S. Two years ago Kroger sued Lidl for trademark infringement, citing similarity between the companies' private label brands, but the case was dropped in September 2017 with both sides agreeing to pay their own legal fees.