The coffee capsule revolution: French competition authority opens up market to Nespresso rivals

The coffee capsule revolution: French competition authority opens up market to Nespresso rivals

Published:

Author: Sarah Livestro

Following an investigation sparked by complaints from rival espresso coffee capsule manufacturers, the French Competition Authority has accepted commitments from Nespresso.

These are designed to open up the French market to rival espresso capsule manufacturers but are likely to have an impact on the wider European market, including in the UK. The case may have implications for other industries where compatibility of secondary 'aftermarket' products with primary products is an issue.

According to the French competition authority, Nespresso has a significant share of the market both for the supply of 'single capsule' espresso machines (73%) and for the supply of espresso capsules (85%) in France. Market shares of this level mean that Nespresso is very likely to be subject to the competition 'dominance' rules, which prohibit it from excluding its competitors from the market unfairly. Against this backdrop, the French competition authority was concerned that Nespresso might have broken those rules by:

  • regularly changing the technical specifications of its machines, which meant that competitors struggled to keep their capsules 'Nespresso compatible'
  • indicating on Nespresso machines and packaging and in the user manual and guarantee that consumers should only use Nespresso capsules with Nespresso machines
  • encouraging consumers, both through the press and in Nespresso 'boutiques', only to use Nespresso capsules with Nespresso machines

To address these concerns, Nespresso has offered commitments to the French competition authority. These are designed to make it easier for rivals to compete with Nespresso in France. Nespresso must now provide competitors with advance warning if it plans to change the design of its machines and give them access to the technical information they need to make their capsules 'Nespresso compatible'. It must also make clear to consumers that use of competing capsules will not invalidate their Nespresso warranty.

Finally, and perhaps most interestingly, Nespresso will work with an independent third party to provide information to manufacturers of Nespresso compatible capsules. According to reports, this information will be supplied to companies doing business both inside and outside of France. This means that the French competition authority's investigation into Nespresso may lead to cheaper Nespresso compatible capsules being readily available on the wider European market. So the impact of the decision - the first into the commercial practices of Nespresso - is likely to be felt by coffee drinkers both inside and outside of France.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.