Nestlé fined for unfair competition

A FRENCH court has ordered Nestlé to pay €500,000 plus legal fees after ruling its Nespresso arm competed unfairly against a rival maker of generic biodegradable coffee capsules that work in its machines.

The Ethical Coffee Company (ECC) filed a lawsuit in Paris against the Swiss-based multinational food and beverage company in 2012.

ECC, which is also based in Switzerland, claimed Nestlé’s Nespresso division intentionally cast doubt in the public mind about the quality, compatibility, safety and biodegradable nature of its capsules.

The complaint alleged that Nestlé’s online Club Nespresso network discouraged customers from using rivals’ capsules. According to the complaint, the network claimed that the using alternative capsules would invalidate any warranty.

The Commercial Court in Paris agreed, and fined Nespresso.

Nespresso plans to appeal against the French court’s decision, a spokeswoman for the company said.

In April, Nestlé came to an agreement to end a probe by the French competition regulator by offering to lift obstacles to makers of rival capsules.

Nearly nine out of 10 coffee capsules sold in France, which represents 25% of the company’s global market, are Nespresso brand.

Photo: Thomas Cloer