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France gives Nespresso competition jolt

17th April 2014, Comments0 comments


Under pressure from anti-trust authorities, Nespresso France has agreed to a series of measures designed to make it easier for rival companies to produce coffee capsules which can be used in its machines.

Under a provisional accord announced on Thursday, the Nestle subsidiary agreed that any changes to the technical specifications of its machines which would make them incompatible with rival capsules will be announced three months before they are applied.

Nespresso also undertook to stop attempts to persuade its customers to shun other capsules through advertising and statements on its packaging, and to modify certain aspects of its machine warranty conditions.

France's Competition Authority will now monitor the market to see if the steps promised by Nespresso prove sufficient to remove what it sees as obstacles to other companies entering the market.

If it is not satisfied, it can proceed to a full anti-trust procedure which could expose the company to fines of up to 10 percent of its turnover.

France is one of Nespresso's biggest markets, accounting for 25 percent of global sales of its own capsules, famously advertised by George Clooney.

Thursday's agreement came after the Competition Authority expressed concern that Nespresso was abusing its dominant position in the French market by making it difficult if not impossible for rivals to compete with its expensive capsules.

The Authority's president, Bruno Lasserre, said it was "troubling" that Nespresso appeared to have made a series of technical changes to its machines from 2009, just as rivals were seeking to enter the market.

"We do not want to deprive Nespresso of its capacity to innovate, but we also want to widen the choice available to consumers," he added.

The capsule issue has sparked legal battles in Germany and Switzerland.


© 2014 AFP

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