Nestle Waters North America has said it is “disappointed” over allegations it attempted to drive a family-owned bottled water company out of business.

The Nestle unit faces the claims in a lawsuit filed by Nirvana Spring Waters this week, which alleges “unlawful anti-competitive practices”, including paying a supermarket not to carry its smaller rival's products. New York state-based Nirvana has claimed the moves led to dramatically” falling sales for the company. 

Nestle Waters told just-drinks today it has yet to receive a copy of the filing, but said it would defend itself "vigorously” against Nirvana's allegations.

“We believe in full and fair competition,” the company said.

In a press release, Nirvana said the two companies signed a non-disclosure agreement in 2012 after Nestle Waters expressed an interest in buying the company. Nirvana alleges that Nestle Waters breached the agreement by simultaneously “engaging in a persistent campaign” to weaken the smaller company.

“By expressing interest in an acquisition, Nestlé got Nirvana to lower its guard,” said Richard Pertz, legal counsel for Nirvana. “A small business success story is becoming a tragedy.”

Nirvana is based in Forestport, New York state, and has a capacity of 25m cases a year.

Nestle Waters North America is a subsidiary of Switzerland-based Nestle Waters, which this month reported a 6% rise in first-half sales helped by growth in emerging markets.