On 5 July 2017, the Spanish Competition Authority reported that it had concluded an inquiry into Schweppes SA after the company agreed to binding commitments to end concerns of restrictions of parallel trade in Schweppes tonic.
The Coca-Cola Company ("Coca-Cola") owns the Schweppes brand in the United Kingdom and in ten other EU Member States, while Orangina Schweppes Holding BV ("OSHBV") owns the brand in Spain and in 16 other Member States. Schweppes SA is the exclusive licensee of the Schweppes brand in Spain.
According to a press release, at the end of 2013, Schweppes SA took issue with the fact that several independent distributors were selling on the Spanish territory Schweppes tonic products that were imported from the United Kingdom. To prevent further commercialisation in Spain, which according to Schweppes SA infringed its rights on the Schweppes brand, Schweppes SA launched legal proceedings against those distributors. These proceedings ended with the signing of several agreements which prevented those distributors from importing into Spain Schweppes tonic products which were not manufactured by Schweppes SA.
In September 2015, the Spanish Competition Authority opened formal proceedings against Schweppes SA because it considered that these agreements may have exceeded Schweppes SA's trademark rights. This is because these agreements not only prevented the importation from the United Kingdom of Schweppes tonic products manufactured by Coca-Cola, but they may have also limited the parallel trade of Schweppes tonic drinks produced by OSHBV and its subsidiaries located in other Member States.
To address the concerns of the Spanish Competition Authority, Schweppes SA offered, in June 2017, the following binding commitments, which the Spanish Competition Authority accepted.
- The existing agreements between Schweppes SA and certain distributors have to be amended to indicate that Schweppes SA only opposes the import, distribution and/or marketing of Schweppes tonic products from the United Kingdom and manufactured by Coca-Cola;
- The scope of future agreements will be limited to the prohibition of import, distribution and/or marketing of Schweppes tonic products imported from the United Kingdom and manufactured by Coca-Cola;
- The scope of on-going judicial proceedings whereby Schweppes SA is challenging certain distributors will be limited to the import, distribution and/or marketing of Schweppes tonic products imported from the United Kingdom and manufactured by Coca-Cola. Schweppes SA must ensure that future judicial decisions are in line with the present commitments and, if they are not, Schweppes SA must notify the court to rule in accordance with such commitments.
These commitments seem to be in line with settled EU case law. Under the exhaustion doctrine, the owner of an intellectual property right is legally barred from invoking his right to prevent the importation of products which have been sold by himself, an affiliated company or licensee, or otherwise with his consent in another Member State. By contrast, the exhaustion doctrine does not apply to branded products whose trademarks do not have 'common ownership', which appears to be the case for Schweppes originating in jurisdictions where Coca-Cola owns the trademark rights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.