The war has been going on for more than ten years in the coffee industry. Ethical Coffee Company, of which Arthur owns 10%, competitor of Nespresso, is demanding 286 million euros from the coffee giant.
It all started in 2010. Nespresso reigns in the market for pod coffee machines, which attracts competitors. This is the case of Ethical Coffee Company (ECC). The company, also Swiss, is launching into the production of biodegradable pods compatible with Nespresso machines after investing 33 million euros in the development of its product, as Le Figaro recalls.
Competition which is not appreciated by the Nestlé subsidiary, which prevents the marketing of ECC capsules in Switzerland by registering them as a trademark. Regarding competition in other countries, such as France, Nespresso manages to modify its machines, and therefore its capsules, regularly, forcing competitors to adapt at the last moment.
Ten years of legal battle
Me François Besse, lawyer for ECC, tells the long story “war of the pods” to our colleagues. He explains that the change in the shape of the capsules was judged to be “likely to constitute a means of a technical nature to implement tied selling, qualifying as an abuse of dominant position on the part of Nespresso”, in 2014, by the Competition Authority in Switzerland. Although this decision ruled in favor of ECC, negotiations, notably for a global contract with Starbucks, stopped short and were taken over by Nespresso.
This aggressive competition from Nespresso caused ECC to fall far behind on the market, which caused its turnover to drop from 14.5 million euros in 2012 to 1.5 million in 2017. In addition, other competitors took the opportunity to develop in the field of capsules compatible with Nespresso, such as L’Or Espresso or Carte Noire.
After several years of legal battle to which the host Arthur was in fact associated, the Swiss Federal Court, which is the highest court in the country, definitively ruled in favor of ECC in 2021. The company is therefore claiming 279 million Swiss francs (286 million euros), which Me François Besse assures is “well below the damage actually suffered”adding that “even if they repair the damage, the gain obtained by the disappearance of the company is much greater” for Nespresso. For its part, the Nestlé subsidiary ensures that it does not accept “allegations” of ECC.
