On 4 September 2014, the French Competition Authority (FCA) announced that it had accepted and rendered binding a series of improved commitments offered by Nespresso to end an investigation into allegedly abusive and exclusive practices that had the effect of precluding competing manufacturers of coffee-capsules from Nespresso's coffee machines.
In France, Nespresso sold 73% of the capsule-coffee machines and Nespresso sold 85% of the capsules compatible with these machines in 2012. Following complaints by two producers of compatible capsules and the FCA's preliminary finding that Nespresso's conduct on the market could be viewed as an abuse of a dominant position, Nespresso proposed its first set of commitments in April 2014 (See VBB on Competition Law, Volume 2014, No. 4, available at www.vbb.com).
Following a market test, Nespresso decided to further supplement and improve its initial proposal to better address the concerns of the FCA, particularly in relation to the issue of the communication of information to competitors regarding technical modifications made to Nespresso's coffee machines. The commitments include that:
- competitors must be notified of any technical modifications as soon as the new machines are in production and no later than 4 months before the new machines are put on the market;
- a "trusted third party" will be appointed to be the intermediary between the parties to prevent the transfer of confidential information;
- competitors will be provided, through the trusted third party, a minimum of 15 prototypes (as opposed to 3 in the previous commitments) of the new machine so that they can carry out compatibility tests with their own capsules; and
- more transparency concerning the origin of the technical modifications, which includes Nespresso's obligation to file to the FCA the reasons behind any future technical changes.
The FCA considered that the improved commitments offered by Nespresso adequately lifted the technical, legal and commercial barriers to entry for other compatible coffee-capsule manufacturers. As a result, the FCA decided to close the proceedings conditional on Nespresso's compliance with these commitments.
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