In December 2010 and May 2011, two competitors of Nespresso on the single portion coffee machines and capsules market, DEMB Holding BV and Maison du Café (“DEMB”) and Ethical Coffee Company (“Ethical”), complained to the French Competition Authority (“FCA”) that certain French and Swiss companies of the Nestlé Group (“Nespresso”) implemented exclusionary  practices notably by tying the purchase of Nespresso capsules to the purchase of Nespresso coffee machines (see our edition of May 2014). This procedure before the FCA is still pending.

On December 4, 2012, Ethical (a Swiss company), initiated a civil suit before the Paris Commercial Court on the basis that Nespresso allegedly acted in an abusive manner through a systematic campaign of denigration of Ethical’s compatible capsules.

Ethical complained that Nespresso’s actions were destined to encourage consumers to use only Nespresso capsules in their Nespresso coffee machines without any objective reason. Ethical argued that Nespresso denigrated Ethical’s compatible capsules and incited consumers to use only Nespresso capsules in its Nespresso Clubs and on internet by publishing false comments from consumers.

On June 6 2014, the Paris Commercial Court issued its decision in which, based on several testimonies, affidavits and bailiffs’ reports, it held that Nespresso’s denigrating practices were established.

In fact, the Court found that Nespresso had indeed referred to the non compatibility of Ethical’s capsules with its coffee machines, to the alleged poor quality of such capsules, to the alleged systematic deterioration of the machines based on the use of Ethical’s capsules and, in certain cases, the Court found that Nespresso even alluded to the danger the use of such capsules could cause to consumers’ health. Consequently the Court ordered Nespresso to pay Ethical EUR 500,000 for unfair competition and EUR 40,000 for legal fees.

At the time of writing there is no known appeal from Nespresso.