Gilbeys and Pedrotti

• Jurisdiction: Ireland
• Judgment Date: 24 March 1999
• Docket Number: Decision No. 544
• Date: 24 March 1999
• Court: Competition Authority (Ireland)

Competition Authority Decision of 24 March 1999 relating to a proceeding under Section 4 of the Competition Act, 1991.

Notification No. CA/544/92E: Gilbeys/Pedrotti

Decision No. 544

COMPETITION AUTHORITY

Abstract:

Competition Law –Exclusive purchase agreement – Application for a certificate or, in the alternative, a licence – The Competition Act 1991, section 4

Pedrotti granted a trade mark licence to Gilbeys for the distribution of wines and spirits within the State and Gilbeys agreed not to purchase wine which they market under the Pedrotti mark from any supplier other than Pedrotti for a period of five years. Gilbeys also agreed not to sell goods under the Pedrotti mark outside the State. The product affected by the agreement represents 2.55% of the relevant market and consequently the agreement has only a negligible impact on competition in the State. The agreement does not restrict the parties in their freedom to take independent commercial decisions. The Competition Authority so held in certifying that the agreement did not have as it’s object or effect the distortion, restriction or prevention of competition within the State.

Introduction

1 Notification was made by Gilbeys of Ireland Limited on 30 September 1992 with a request for a certificate under Section 4(4) of the Competition Act 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2) in respect of a trade-mark and exclusive purchase agreement.

1. (a) Subject of the Notification

   2. This notification concerns a trade-mark and exclusive purchase agreement, dated 1st September, 1988 between Pedrotti Interdrink S.A.S.(Pedrotti) of 38060 Nomi (Trento) Italy and Gilbeys of Ireland Limited (Gilbeys). The Licence Agreement takes the form of a trade mark licence granted by Pedrotti to Gilbeys, whereby Pedrotti agreed to grant a licence to Gilbeys to use certain of its trademarks in relation to the distribution of wines, spirits and liqueurs in the State, and amendments to the Licence Agreement. The Licence Agreement and the Amendment Agreement should be read together.

2. (b) The Parties Involved

   3. Gilbeys is part of the Gilbeys of Ireland Group whose principal activities are the manufacturing and world-wide marketing of cream liqueurs, manufacturing, selling and distribution of Smirnoff Vodka and the selling and distribution of imported wines and spirits within Ireland. Gilbeys’ ultimate parent company is now Diageo (it was Grand Metropolitan plc at the time of the notification). As Pedrotti is not party to this notification, Gilbeys is not in a position to provide details on the group structure of Pedrotti.

3. (c) The Products and the Markets

   4. The Authority is of the view that the relevant market for the purposes of this notification is the wine market in the State. This is a market that is characterised by many brands from the following countries, Australia, Chile. France, Germany, Italy, New Zealand, Portugal, Spain and the USA, among others. The brands are imported by many competing importers and distributors in the State. The Authority has estimated that Gilbeys share of the wine market in the State is approximately [].

   5. Gilbeys have estimated that the total market in 1995 in volume terms was approximately [] million 9 litre cases (i.e.12 x 75 cl bottles per case). In addition to supplying the Pedrotti brand in Ireland, Gilbeys also supply the following brands, namely:

   Lindemans (Australian)

   Piat (French)

   Black Tower (German)

   Faustino (Spanish)

   Blossom Hill (USA)

4. (d) Structure of the Market

   6. With respect to turnover in the relevant market, the volume of Pedrotti sold by Gilbeys in 1995 was approximately []9litre cases. On the basis that the total estimated volume of wine sold in the Irish market in 1995was [] million 9 litre cases, the market share represented by sales of Pedrotti was approximately [].

   7. Gilbeys does not have any substantial interests falling short of control (more than25%but less than 50~o) in any other company competing in a market affected by the Agreement.

5. (e) The Notified Arrangement

   8. The purpose of the Agreement (Licence Agreement and Amendment Agreement) is to allow Gilbeys to have the sole and exclusive licence to use the Pedrotti trademark in Ireland in accordance with the terms of the Agreement which among other things provides for a payment of a sum of money from Gilbeys to Pedrotti which sum of money was paid over to Pedrotti in accordance with the terms of the Amendment Agreement. In general, the parties do not believe that the Agreement restricts the parties in their freedom to take independent commercial decisions.

   9. Under Clause 1 of the Licence Agreement, as confirmed by Clause 2 of the Amendment Agreement, Gilbeys was granted the sole and exclusive licence to use the Pedrotti trademark in Ireland in accordance with the terms of the Licence Agreement;

   10. Under Clause 4 of the Licence Agreement, Gilbeys will not purchase wine or sparkling wine which they market under the Pedrotti label from any supplier other than Pedrotti for the period of five years from the date of the Licence Agreement. However,...