The Australian Competition and Consumer Commission has issued a notice revoking a notification* lodged by Nestlé Australia Ltd on 2 December 2005.
Nestlé Australia lodged the notification following Aldi's importation and sale of Nescafé brand instant coffee manufactured in Indonesia and Brazil.
"The notification concerns a refusal by Nestlé Australia to supply Nestlé branded products, including Nescafé Blend 43 instant coffee and Milo, and private label products to Aldi Stores unless Aldi complied with Nestlé Australia's conditions on the presentation and advertising of the imported products", ACCC Chairman, Mr Graeme Samuel, said today.
"Aldi had not agreed to display the imported Nescafé coffee in the way that Nestlé Australia required.
"The ACCC believes that Aldi was already taking adequate steps to differentiate the imported Nescafé instant coffee from Nescafé Blend 43.
"Nestlé Australia told the ACCC that it wanted consumers to know that the imported products were not the coffee brands they were familiar with, and that they tasted different.
"The ACCC has decided that the notified conduct has an anti-competitive purpose. The ACCC also considers that the conduct has the effect or is likely to have the effect of substantially lessening competition, and does not result in a net public benefit. In these circumstances, the ACCC is required to issue a notice to revoke.
"The ACCC believes that Nestlé Australia had a purpose of substantially lessening competition in the instant coffee market.
"The ACCC obtained documents from Nestlé Australia which the ACCC considered support these views. The ACCC's Notice contains numerous quotes from those documents.
The ACCC does not usually quote from internal documents obtained from parties. However, it did so in this case, because Nestlé Australia challenged the factual basis for the ACCC's conclusions.
"The ACCC considered that Nestlé Australia's purpose was to discourage and eliminate a new source of competition for the local (Australian) Nescafé instant coffee brands.
"The ACCC believes that part of Nestlé Australia's anti-competitive purpose was to remove the stimulus to other Australian grocery retailers, who might have responded to Aldi's sale of the imported Nescafé instant coffee by discounting Nescafé Blend 43 or importing similar products.
"The ACCC also believes that Nestlé Australia's conduct has, or is likely to have, an anti-competitive effect in the local retail grocery markets where Aldi has stores.
"The imported Nescafé instant coffee introduced significant competitive tension in the local areas where Aldi operates supermarkets. Nestlé Australia's conduct would increase Aldi's costs and reduce the attractiveness of the products in the eyes of consumers. This would reduce or eliminate this competitive tension.
"The refusal to supply Aldi goes much further than is needed to inform consumers".
Nestlé Australia may now lodge an application to have the ACCC's decision reviewed by the Australian Competition Tribunal.
More information regarding the notification and a copy of the notice are available from the ACCC's website or by emailing the Adjudication Branch at adjudication@accc.gov.au.
* By lodging an exclusive dealing notification with the ACCC, a party obtains immunity from court action for that conduct. In this case, immunity was conferred automatically when the notification was lodged. Once the ACCC receives a notification, it reviews the purpose and effect of the notified conduct. If the ACCC forms the view that the conduct substantially lessens competition, and that it does not deliver a net public benefit, it may issue a draft notice proposing to revoke the notification. After considering any submissions from interested parties in response to the draft notice, and conducting a conference if any of the interested parties call for a conference, the ACCC must decide whether to issue a final notice. If the ACCC issues a final notice, the immunity is lost after 30 days, unless an application to review the decision is lodged with the Australian Competition Tribunal.
