1. CJEU judgment in the Schweppes v Coca Cola case
The Court of Justice of the European Union (“CJEU”) has resolved the request for a preliminary ruling issued by the Commercial Court No 8 of Barcelona in the framework of the dispute between Schweppes Spain and the Coca-Cola Group of the United Kingdom (C-291/16) concerning the exhaustion of trademark rights in relation to Schweppes-branded tonic water.
Initially, the trademark “Schweppes” was registered by its proprietor Cadbury Schweppes as a national word and figurative mark in each of the Member States of the European Union. These national trade marks were, in essence, identical. In 1999, Cadbury Schweppes assigned some of these trademarks –including those registered in the United Kingdom– to the Coca-Cola Group. However, Cadbury Schweppes remained the proprietor of the Spanish mark as well as the marks registered in 16 other Member states (nowadays owned by Schweppes International).
The issue that has now been resolved by the CJEU is whether Schweppes Spain –a subsidiary of Schweppes International– is entitled to prevent the commercialisation in Spain of Schweppes-branded tonic water produced by the Coca-Cola Group in the United Kingdom on the grounds of a trademark infringement. In particular, the CJEU’s judgment clarifies –in light of this case– how the principle of the exhaustion of the rights conferred to a trademark –as laid down in article 7.1 of Directive 2008/95– is to be interpreted. This principle implies that the trade mark does not entitle its proprietor to prohibit its use in relation to goods which have been put on the market in the EU under that trademark by the proprietor or with their consent, unless there are legitimate grounds for such prohibition.
In the present case, it also happens that, in September 2015, the Spanish National Markets and Competition Commission (the “CNMC” in Spanish) initiated a sanctioning procedure against Schweppes Spain precisely for preventing imports of Schweppes-branded products not operated by the Spanish registered trademark (case S/DC/0548/15).
The origin of both conflicts is to be traced back to 2013 when Schweppes Spain became aware that several of its independent distributors were introducing Schweppes-branded tonic water produced by the Coca-Cola Group in the United Kingdom into Spain. By that time, the Spain-based company initiated a series of legal proceedings against said distributors for an alleged infringement of its rights over the “Schweppes” brand in Spain.
In order to put an end to some of those proceedings, the parties involved decided to include clauses restricting the commercialisation of Schweppes-branded products that had not been produced by Schweppes Spain, thus limiting parallel imports concerning said products.
As discussed in previous editions (see here), from the literal nature of these agreements it followed that distributors were not only prevented from importing Schweppes-branded tonic water produced by the Coca-Cola Group outside Spain, but also the tonic water manufactured by any of the subsidiaries of the group Schweppes International, to which Schweppes Spain belongs. In this scenario, the CNMC agreed to close the file without sanctioning Schweppes Spain provided that the clauses prohibiting imports from subsidiaries of Schweppes International were eliminated. The CNMC understood that, in principle, the prohibition in relation to products produced by the Coca-Cola Group was justified, pending the interpretation of the CJEU on the basis of the requests for preliminary rulings.
In this respect, the CJEU now confirms the opinion issued by Advocate General Mengozzi (see here) and, following EU case-law, determines that the exhaustion of the right conferred to a trademark is to be interpreted as precluding the proprietor of a national trademark from opposing the import of identical goods bearing the same mark originating in another Member State in which that mark, which initially belonged to that proprietor, is now owned by a third party which has acquired the rights thereto by assignment, when the proprietors of both trademarks operate “under the control of a single undertaking”. This unity of control is to be recognised: (i) if the proprietor (in this case Schweppes Spain) “has actively and deliberately continued to promote the appearance or image of a single global trademark, thus generating or increasing confusion on the part of the public concerned as to the commercial origin of goods bearing that mark”; or (ii) if economic links exist between Schweppes Spain and the Coca-Cola Group of the UK, “inasmuch as they coordinate their commercial policies or reach an agreement in order to exercise joint control over the use of the trademark, so that it is possible for them to determine the goods to which the trademark is affixed and to control the quality of those goods.”
It is now for the court which requested the preliminary ruling to appreciate whether this single global trade strategy has been promoted or whether those economic links between Schweppes Spain and the Coca-Cola Group of the UK exist. In the event that this was proven, the prohibition on the commercialisation of these products would not only constitute an infringement of trademark rights as said rights would have been exhausted, but would also imply a breach of competition law which would compel the CNMC to revisit its position in the above-commented case.
2. Restrictive practices
16/01/2018. The European Commission continues its investigation into the sector of Kraft paper and industrial paper sacks, as the premises of another company operating in the sector have been inspected.
This is the third inspection conducted in the framework of this investigation, following the dawn raids carried out in 2016 and 2017, which targeted companies in several EU Member States. The Commission has concerns that the inspected companies may have violated article 101 of the Treaty on the Functioning of the European Union (“TFEU”).
Butter and margarine (Press release)
20/12/2018. The Greek Competition Commission has opened an investigation into alleged anticompetitive practices, including abuse of dominant position, committed by the company Minerva S.A.
According to the Greek authority, agreements regulating the distribution of butter and margarine products concluded by the company, both at wholesale and retail level, may infringe articles 101 and 102 of the TFEU, as well as their equivalent under Greek legislation.
In particular, the investigation focuses on resale price maintenance clauses as well as restrictions of passive selling –understood as a response to unsolicited requests from individual customers– in territories exclusively assigned to a distributor.
Tobacco (Press release) 24/01/2018. The French Competition Authority has conducted inspections at the premises of several companies operating in the tobacco industry.
Information on the type of anticompetitive infringement and the companies involved has not been disclosed.
In Spain, the CNMC conducted inspections in the tobacco industry several months ago, which resulted in the opening of a sanctioning proceeding. Similar actions were adopted by the Belgian Authority in the same period of time.
Dairy companies (Press release)
09/01/2018. The German Competition Authority (Bundeskartellamt) has discontinued its investigation into the conditions of supply for raw milk conducted as a sample case against Germany's largest dairy producer, Deutsche Milchkontor.
The investigation stemmed from a March report by virtue of which the authority warned about the fragile competitive structure of the commercial relationship between farmers and dairies. Among other issues, the authority pointed at the excessive duration of contracts, the existence of exclusive supply obligations in favour of a particular dairy company and the application ex-post pricing through IT systems.
Nevertheless, recent developments in the raw milk supply market evidence a strengthening of its competitive structure. This is why the Bundeskartellamt has decided to suspend its investigation. For example, significantly more farmers have switched to another dairy producer, implying a 20% reduction of the raw milk processed by Deutsche Milchkontor. Moreover, the dairy giant has motu proprio modfied its procurement conditions, reducing its period of notice for the delivery of milk from 24 to 12 months.
Unilever (Press release)
06/12/2017. The Italian Competition Authority has sanctioned Unilever for abusing its dominant position in the ice cream market.
The Autoritá –whose investigation started in 2013 at the behest of a local ice cream producer from the coastal town of Rimini– has determined that the company implemented an exclusion strategy against its competitors consisting of the systematic conclusion of commercial clauses and loyalty conditions aimed at maintaining an exclusive supply relationship with the retailers of the sector.
The abuse has apparently been committed in the Single-wrapped impulse ice cream market –usually consumed in the hospitality sector, convenience stores, kiosks etc.–, where Unilever holds a position of dominance through its Algida brand (Frigo in Spain).
The company has been fined €60 million, although an appeal against the resolution is still possible.
Wood-based panels (Press release)
28/12/2017. The Polish Competition Authority has sanctioned four wood-based panel manufacturers for price-fixing and exchanges of sensitive commercial information.
The cartel, which was in force between 2008 and 2011, fixed sales prices for particle and fibreboards –usually used to produce furniture–, resulting in a general increase in prices.
The agreement, orchestrated by high-level managers, foresaw the application of coercive measures for those cartelists failing to comply with the collusive price policy.
The fine is 135 million Polish Zloty in total (€32 million approximately). However, one of the companies involved has taken advantage of the leniency programme and, by providing the authority with relevant information on the cartel, it has managed to avoid the payment of the sanction.
Robot vacuum cleaners (Press release)
13/12/2017. The Austrian Competition Authority has fined the Robot vacuum cleaners manufacturer Robopolis a total of €208,200.
According to the authority, the company and its retail distributors entered into resale price maintenance agreements as well as territorial exclusivity clauses.
Said vertical arrangements between manufacturers and distributors are prohibited by article 101 TFEU and its equivalent under Austrian legislation.
3. Courts France
Amazon (Press release)
18/12/2017. The French Ministry of Economy has sued Amazon for establishing abusive commercial terms to the detriment of its suppliers.
Following an investigation, the Directorate-General for Competition, Consumer Affairs and Prevention of Fraud –attached to said Ministry– has concluded that the American company has imposed clauses permitting it to unilaterally modify, suspend or even terminate the commercial agreements subscribed with its suppliers.
According to the Directorate-General, said practices infringe the French Commercial Code. This is why the Ministry requests the tribunal to impose a €10 million fine on Amazon.
23/10/2017. The French Court of Cassation confirms the decision of the Autorité de la Concurrence which dismissed allegations on the existence of a relevant market for online private shopping.
The Court rejects the differentiation between the online private shopping market and other channels of outlet sales, both through physical stores or on the internet. Consequently, the Court determines that online retailer Vente-Privée –which sells luxury products at reduced prices to online subscribers– does not hold a position of dominance.
In doing so, the Court upholds the view of the Autorité de la Concurrence which, in 2014, filed the case against Vente-Privéé, who had allegedly abused its dominant position in the online private shopping market by establishing exclusivity clauses with major brands, preventing them from commercialising their unsold stock through competitors’ websites.
In its decision, the Court of Cassation declares that the existence of a differentiated online private shopping market “is not established” since companies operating in the market directly compete with other distribution channels, both online and offline (e.g. brick and mortar brand stores which have an outlet space; general e-commerce websites; the so-called showrooms etc.).
Sausage cartel (Press article)
15/01/2018. The Düsseldorf Higher Regional Court confirms the fine imposed by the German Competition Authority on the sausage manufacturer Rügenwalder.
The sanction derives from the procedure against the so-called sausage manufacturers cartel, by virtue of which the Bundeskartellamt imposed a €338 million fine on a series of processed meat producers for price-fixing.
The sanction finally imposed on Rügenwalder has been slightly reduced as the Tribunal has limited the company’s period of involvement in the cartel.
Edeka (Press article)
23/01/2018. The German Supreme Court declares the rebates and commercial terms required by supermarket operator Edeka to be abusive.
The 2014 Bundeskartellamt decision on the matter is thereby confirmed. In said decision, the German Competition Authority considered that the company was not allowed to exploit its outstanding market power to the detriment of four sparkling wine producers by demanding a series of bonuses and commercial rebates.
Sonae MC / Balaiko / JD Sports Fashion / JD Sprinter Holdings / Sport Zone (Press release)
18/01/2018. The European Commission has approved the acquisition of the Portuguese sport products retailer by the Spanish JD Sprinter Holdings, as well as the acquisition of joint control of the latter company by the British JD Sports Fashion, the Spanish Balaiko and the Portuguese Sonae MC.
The market affected by the transaction is the retail of sportswear and sport products.
The Commission has authorised the transaction on the understanding that the horizontal overlaps among the companies involved are moderate and that market share increases are not significant. The presence of sufficiently strong competitors both in Spain and Portugal has also been considered.
Bunge / IOI / Loders (Press release)
19/01/2018. The European Commission has unconditionally authorised the acquisition of joint control of the Dutch oil and edible fats producer Loders by the company Bunge –also from the Netherlands– and the Malaysian IOI.
Bunge does not only produce oil, but is also active in the milling of cereals and grains. IOI, in turn, is a palm oil manufacturer and owns plantations in Indonesia and Malaysia.
Galeries Lafayette / La Redoute (Press release)
10/01/2018. The French Competition Authority has cleared the acquisition of la Redoute by the group Galleries Lafayette.
The acquired company is primarily dedicated to the commercialisation of homeware and clothing, to a great extent via its website and catalogue, but also through its 11 brick and mortar shops.
The Lafayette group, in turn, is the owner of the generalist Galeries Lafayette and the shopping malls BHV/Marais. It also operates the jewellery-watchmaking brands Louis Pion, Royal Quartz, Guérin Joaillerie and Augis 1830, both online and through its physical shops.
Even though both companies’ activities overlap in the commercialisation and distribution of non-food items and costume jewellery, l’Autorité does not observe anticompetitive risks because of the strong presence of competitors in the market.
Financière Cofigeo / Agripole Ready Meals Division (Press release)
04/12/2017. The French Competition Authority opens the second phase investigation into the acquisition by Financière Cofigeo of certain assets of the Agripole group's ready meals division.
Financière Cofigeo is mainly active in the production and commercialisation of ready meals and canned food. The assets acquired and, particularly, the William Saurin, Panzani and Garbit brands operate to a great extent in the same market.
Since the transaction would mean the merging of two of the leading companies in the French market for ready meals and canned food, l’Autorité understands that the concentration requires an in-depth investigation.
According to the authority, for the purposes of defining the market, different possibilities are being considered: segmenting canned foods by recipe group (French dishes, Italian dishes, exotic cuisine); distinguishing between manufacturers' brands and store brands; or differentiating between cans and microwavable trays.
Ardian / Panasa / Bellsolà (File)
10/01/2017. The CNMC has granted a phase 1 approval to the acquisition of sole control by the French fund Artian of the Spanish bread, biscuit and bakery products manufacturers Panasa and Bellsolà.
The French fund will merge both companies in order to create a larger group with a presence in numerous countries. The newly created enterprise will employ more than 1,700 workers and will have a joint turnover of approximately €300 million.
Refresco / Cott (Press release)
17/01/2018. Dutch company Refresco has offered to disinvest one of the factories owned by the Canadian Cott so as to receive approval from the British Authority and complete their merger (see last edition).
Although it is true that the initial investigation did not reveal any general competition concerns, the merging companies involved supply juice drinks using a particular production process, which allows them to be sold preservative-free and without refrigeration. Considering that only one other competitors in the UK is currently applying that production process, the British Authority was concerned that the transaction might result in higher prices and harsher terms and conditions for retailers.
In order to address the authority’s concerns, Refresco has now offered to sell the only UK-based Cott facility to use this production process.
Tesco / Booker (Press release)
20/12/2017. The British Competition Authority definitively authorises the merger between retailer Tesco and wholesaler Booker.
The CMA had provisionally approved the transaction, although its definitive authorisation was made subject to a consultation period with competitors and other interested parties (see last edition).
Even though Tesco and Booker do not directly compete (as they operate at different levels of the supply chain), the authority was concerned that such vertical integration might be able to excessively strengthen the companies’ position at both levels, resulting in higher prices and poorer services. In this sense, one of the authority’s most relevant concerns was that the transaction might enable Booker to exploit Tesco’s great retail power so as to require abusive conditions to its suppliers, thus displacing its competitors at the wholesale level.
Nevertheless, following its investigation, the authority has confirmed the good competitive health of the British consumer sector, both at the retail and wholesale level, and has consequently authorised the transaction.
Aviagen / Hubbard (File)
21/12/2017. The Portuguese Competition Authority has authorised the acquisition of sole control by the US Aviagen of five companies owned by the French group Hubbard.
Aviagen is active in the production and selling of breeding poultry. Hubbard, in turn, is dedicated to the genetic selection, breeding and commercialisation of poultry.
Protected designations of origin
Champagner sorbet (Press release)
27/10/2017. The CJEU establishes that a sorbet may be sold under the name Champagner Sorbet if it has, as one of its essential characteristics, a taste attributable primarily to champagne.
The CJEU solves thereby the preliminary question remitted by the German Supreme Court which had to settle the dispute between the Comité Interprofessionnel du Vin de Champagne and the German supermarket Aldi, which used to commercialise this product containing 12% of said sparkling wine.
The CJEU determines that the name Champagner Sorbet does not infringe the protected designation of origin Champagne if the champagne used as an ingredient in that product actually confers one of its essential characteristics, i.e. its aroma or taste in particular. The Court observes in that regard that the quantity of champagne in the sorbet is a significant but not, in itself, sufficient factor.
It is now for the German Tribunal to determine whether the champagne used as an ingredient actually confers one of its essential characteristics on the product. Despite the fact that Aldi does not sell this product any more, the judgment is to some extent good news for those retailers making use of protected designations of origin to boost sales by linking said products to the prestige and reputation associated with said designation.
Mexico and the EU clash over cheese designations of origin (Press article)
10/01/2018. The renewal of the Free Trade Agreement between Mexico and the European Union (FTA EU-MX) has stalled because of the controversy on the designation of origin of 57 dairy products the EU aims to protect.
The types of cheese under scrutiny are those closely linked to Europe’s gastronomic tradition, such as manchego, parmigiano, feta, etc. The Mexican dairy industry, however, has experienced its own development and designations of origin do not correspond with the characteristics of the products through the European prism. For example, in Mexico, manchego is associated with an easily meltable cow’s cheese usually consumed with nachos.
Talks on 30 out of the 57 cheeses in question are likely to advance. However, discussions about designations of origin aimed at protecting those cheeses with the greatest economic impact and which are most linked to the European gastronomic tradition –such as parmigiano, gruyere, feta and manchego itself– appear to be stuck.
Mexican industrialists observe the EU’s regulatory endeavour as an interference in the commercial policy they has developed over many years and which has acquired its very own identity. Should the Mexican industry accept the rules Brussels aims to impose, all labelling making reference to the protected designations of origin is to be withdrawn from the market. For the Mexican industry, this would imply significant costs, not only related to the removal of the affected labelling, but also in terms of confusion among clients, as they are used to identify a certain cheese type with a specific name.
In turn, the EU highlights the necessity of protecting the quality and reputation of a product that, for its origin, has its very own quality characteristics.
Torta del Casar – Extremadura cheeses (Judgement)
14/12/2017. The EU General Tribunal rules in favour of Torta del Casar from Caceres in its dispute against De la Serna cheese from Badajoz, annulling the resolution of the European Union Intellectual Property Office (“EUIPO”) that accepted Torta de la Serena as a registered trademark.
The General Court argues that the EUIPO “based the contested decision essentially on the fact that the term «cheese torte» did not enjoy the protection conferred by the Regulation” insofar as “it did not designate a geographical area as such, but the mere shape of the cheese”. According to the Tribunal, the EUIPO erred "by not examining whether the term" cheese torte "constituted a traditional non-geographical denomination", also protected by the Regulation on the Protection of Geographical Indications and Designations of Origin.
The General Tribunal’s judgement can be appealed before the CJEU.
Novel Foods Regulation (Regulation)
01/01/2018. As from 1 January 2018, several provisions of Regulation (EU) 2015/2283 on novel foods apply.
So-called “novel food” is defined as food that has not been consumed to a significant degree by humans in the EU before 15 May 1997, when the first Regulation on novel food came into force. Examples of Novel Food include chia seeds, Krill, mushrooms and plants not consumed in Europe, food with a new or intentionally modified molecular structure and, in general terms, products traditionally consumed outside EU borders.
It is precisely because of the fact that they are alien to the European tradition that these products are subject to control and regulation, on the grounds of consumer safety.
Its legal regime –underpinned by the Regulation itself as well as a series of implementing acts– foresees, inter alia, expanded categories of novel foods, an EU list of authorised novel foods, a centralised authorisation system with applications submitted to the European Commission and a simplified assessment procedure for traditional food from non-EU countries.
Holiday accommodation and misleading advertisement (Press release)
17/01/2018. The Dutch Competition Authority has imposed a fine of €325,000 on the holiday accommodation rental company Leisure for misleading pricing on its website www.belvilla.nl.
The authority has concluded that entry-level prices published on the website do not correspond to the final prices to be paid for booking accommodation. Additional costs are hidden from the customer until the final stage of the search process, which undermines price transparency and prevents consumers from reasonably comparing offers made by other competitors.
In the last few weeks, a number of European competition authorities –e.g. the German Bundeskartellamt and the British Competition and Markets Authority– have focused on misleading advertising published on comparison websites (see last edition).
05/12/2017. The jury of the Spanish advertising self-regulatory organisation (“Autocontrol”) determines that fruit and vegetables advertising containing a smiling heart along with a statement that the product “fulfils the criteria of the Spanish Heart Foundation” infringes Regulation (EC) No 1924/2006 on nutrition and health claims made on foods.
According to the jury, the contested advertising “unequivocally conveys the message that the promoted product has beneficial properties for cardiovascular health”. However, this “general statement on the products’ cardiovascular properties is not accompanied –as required by Regulation 1924/2006– by a specific health claim included in the list of authorized health claims, and through which the specific action of the product in relation to cardiovascular health is specified”.
Autocontrol is the independent advertising self-regulatory organisation in Spain. It is comprised of advertisers, advertising agencies, media and professional associations. According to the organisation itself, its goal is to work for responsible, truthful, legal, honest and loyal advertising.
The report issued by the jury is not binding, since the company under scrutiny is not associated to Autocontrol. That said, Autocontrol is a well renowned institution in the sector.