“Predatory Technology” Update: The Nespresso Case
The British lawyer who blogged about “predatory technology” becoming a “viable antitrust concept” (see my post here) has found support for the doctrine in a recent ruling by the French Competition Authority.
Nespresso, the coffee company whose brewing machines and coffee capsules are found in more than 25 percent of French households, is being penalized for design innovations. New features include a repositioned seal on the coffee capsule; additional ribbing, hooks and grooves in the extractor cage; modified flow meter settings, and a new capsule perforation system. As a result, Nespresso’s newest machines won’t accept capsules designed to work in older machines.
Nespresso’s rivals complained. In effect, they said: “We’re not ingenious enough to develop our own coffee brewing machine or the capsules to go with it. But once your patents expired, we did manage to copy your capsules well enough to work with your old machines. Now you’re leaving us behind! You’re changing everything up in ways that are difficult to copy. Not only that, but you’re urging consumers to ignore our products and use only Nespresso brand capsules in Nespresso machines. This is unfair! We want the government to force you to slow down so that we can catch up.”
Voila! Nespresso has now been coerced into providing technical bulletins to its competitors, outlining all innovations three months in advance of putting them on the market. Nespresso is also being forced to “refrain from making any comment about competitors’ capsules.”
Sophie Lawrance, the British lawyer who blogged about the Nespresso case, notes that achieving market advantages “primarily by technical means brings product redesigns, which could be described as ‘predatory’,” directly into antitrust analysis.
Even more frightening, in my view, are the striking parallels between the Nespresso case and the pending lawsuits under American antitrust law (which I blogged about here) against Keurig, maker of the popular “K-cup” coffee machines.
I wish those who are complacent about antitrust law’s depredations would wake up and smell the coffee.