Nespresso Sued in Paris by Ethical Coffee for ‘Smear’ Campaign

Nestle SA (NESN) was sued in Paris by capsule-coffee maker Ethical Coffee Co., which claimed the Swiss food company’s Nespresso brand engaged in unfair competition practices to stymie its rival’s growth.

Ethical Coffee filed a suit before the commercial tribunal yesterday claiming a “systematic smear” effort by Nespresso to bad-mouth its products and steer clients away from the competition, the Fribourg, Switzerland-based company said in a statement. Nespresso made such comments through its Nespresso Club, on the Internet and through machine distributors, Ethical Coffee said.

“It would have been fairer and far better if Nespresso had tried to beat the competition in terms of quality and price,” Chief Executive Officer Jean-Paul Gaillard said in today’s statement. “However, where the consumer opted for our products, Nespresso clearly tries, even through unlawful means, to influence their decision.”

Nespresso, one of Nestle’s fastest-growing brands, faces increased competition as other food companies including D.E Master Blenders 1753 NV began offering coffee-filled capsules that work in its machines. Vevey, Switzerland-based Nestle has taken legal action against Ethical Coffee and other capsule makers in countries including France and Germany, as well as at home, arguing the rivals violate its patents.

“The allegations by ECC are without substance and we believe that the complaint has no merit,” Nespresso General Counsel Daniel Weston said today in an e-mail. “This is part of an on-going pattern and is not the first time that this company has made similar claims.”

Ethical Coffee has asked the court to order Nespresso to cease such practices and is seeking unspecified “considerable compensation” for the financial harm it’s suffered since entering the market, according to the statement.

To contact the reporters on this story: Heather Smith in Paris at hsmith26@bloomberg.net; Dermot Doherty in Geneva at ddoherty9@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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