Nestle Faces Coffee Capsule Lawsuit in France ZURICH

Nestle Faces Coffee Capsule Lawsuit in France ZURICH
(AFP)--
Nestle SA (NESN.VX) faced a fresh legal challenge to itsNespresso coffee capsule business when a rival said Wednesday it had filed alawsuit against the food giant in France. The Swiss generic capsule maker Ethical Coffee Company, which has won legalbattles against Nestle for the right to market its biodegradable capsules inGermany and Switzerland, claims Nestle has tried to discredit its products inFrance via its Nespresso club, internet blogs and distributors. "Basically we want to stop this slurring and disloyal competition," ECC chiefexecutive and founder Jean-Paul Gaillard told AFP, accusing Nestle of providing"false information" to "smear our products." Nestle told AFP in an email that the ECC allegations were "unfounded",insisting it always acted according to the principles of free and fair tradeand that it abided by "all applicable laws and regulations." "We vigorously object to these unfounded declarations and we look forward topresenting our arguments within the appropriate framework," Nestle Nespresso'sgeneral counsel Daniel Weston said, adding that the ECC allegations "were partof a recurrent pattern." A source close to ECC said on condition of anonymity that the lawsuit soughtdamages of more than 50 million euros ($65 million). Gaillard, who jumped ship as Nespresso managing director to create ECC in2008, insisted that the company had no choice but to bring its battle to court. "When we launched [the capsules] we knew there would be a fight," he toldAFP, adding that there was "no problem with a normal fair fight betweencompanies, but when it becomes unfair there is only one way to go, and that isthe courts." ECC launched its capsules in France in 2010 and in nine other Europeancountries in 2011. The French sector represents around 60% of ECC's turnover,it said. In a bid to protect Nespresso's capsule sales, which hit CHF3 billion Swissfrancs in 2011, Nestle fought back with lawsuits in several countries. But the food giant suffered a double blow in July when Swiss and Germancourts decided not to grant an injunction against the sale of ECC'sbiodegradable coffee capsules. The overall market for such capsules is expected to reach over $8.0 billionby 2014.