France: Nespresso Offers Commitments To The French Competition Authority In Coffee-Capsule Probe
On 17 April 2014, the French Competition Authority (FCA) announced that Nespresso has offered commitments to end an investigation into allegedly abusive and exclusive practices that had the effect of foreclosing competing manufacturers of coffee capsules from Nespresso’s coffee machines.
In France, 73% of the capsule-coffee machines were sold by Nespresso and 85% of the capsules compatible with these machines were sold by Nespresso in 2012.
The commitments follow complaints to the FCA by two producers of compatible capsules, D.E. Master Benders and the Ethical Coffee Company, claiming that Nespresso had engaged in anticompetitive practices, including by tying the purchase of its capsules to that of its coffee machines. As a result of the investigation, the FCA reached a preliminary finding that Nespresso’s conduct in successively altering the specifications of its coffee machines to make the use of competitors’ compatible capsules more difficult, as well as by engaging in other exclusionary commercial practices (such as placing on its machine, on its packaging and in its instruction manual comments dissuading consumers from using third-party compatible capsules) could be viewed as an abuse of dominant position.
To address these concerns, Nespresso offered three sets of commitments to the FCA, which would be valid for a seven-year period:
- The technical modifications made to Nespresso machines that might affect the compatibility of third-party capsules must be provided on demand to producers of such capsules at least three months before a new machine is placed on the market;
- The warranty terms of the machine will be modified. To avoid liability, Nespresso has the burden of proving that the damage to its machine is caused by a third-party capsule; and
- Nespresso will implement a compliance programme to ensure that it does not otherwise discourage consumers from using third-party capsules.
The FCA is accepting comments until 19 May 2014.