Open question 1
Frizzz is an undertaking having its headquarters in Berlin, Germany. Frizzz is producer of different types of soft drinks. The factories that produces the soft drinks distributes direcly to retail stores in Germany, Belgium, the Netherlands and Spain. Since 2010, X chooses to focus on producing only a few juices, which have been successful over the years. Specifically, X produces orange juice and apple juice.
In the market for distribution of orange juice Frizzz has a market share of 51% in Germany, 47 % in Belgium, 37% in the Netherlands and 28% in Spain. At the European level Frizzz has a market share of 45%, where its main competitors are Juicy and Fresh, both registered in Italy and both distributing their products in the German, Spain, Belgian and Dutch markets. Juicy has a market share of 23% at the European level while Fresh has a market share of 22% at the European level. Juicy and Fresh use the same business model as Frizzz which entails direct distribution to retailers, no wholesalers being involved. During 2010, 2011 and 2012 the prices for orange juice have increased steadily. The table below shows the evolution of prices for the X, Y and Z backpacks throughout these years.
End of 2010 End of 2011 End of 2012
X €45 €47 €49
Y €46 €48 €50
Z €42 €49 €51
The CEO's of Juicy and Fresh went to the same conference in Madrid with the same AirSpain flight departing from Amsterdam, sharing neighbouring business class seats. During the flight and also during the conference they discussed important aspects with regard to the production and distribution of mountaineering equipments in Europe. They both manifested their concern with regard to the costs of the ingredients their companies use for their products; they also exchanged opinions on how their know-how and testing specialists were accustomed to work and, most importantly, they agreed that based on their companies’ production and having in mind the costs incurred, the prices charged for their products are the ‘correct’ ones. Moreover, the two CEO’s were on the same page when talking about the price for the orange juice which they believed should not go below € 1,75 per bottle. During the second day of the conference, they met up with the CEO of Frizzz, with whom they had lunch and a couple of drinks together during the final conference reception. The three CEO’s agreed to keep in touch in the future and maybe organize a nice vacation in the near future.
Since the conference, the CEO’s of Juicy and Fresh exchange constant courtesy emails and phone calls; occasionally, they also send birthday cards to the CEO of Frizzz. In january 2011 the CEO of Frizzz decides not to return the courtesy and moreover, contemplates changing his business plans in the near future. For the first four months of 2011 the following marketing policies will be implemented by Frizzz. First, the decision to lower the prices for the Frizzz apple juice delivered to certain retailers will be taken. Thus, the German and Italian retail stores which by their own choice stock the Frizzz apple juice on their best viewed shelves and store display windows (therefore bringing it ‘closer to the end user’) will be supplied with full orders (as many items as requested by the retail stores in their invoices) of Frizzz apple juice for the price of €1,58 per bottle, which is 10% below the average total cost of production. Also, the CEO of Frizzz instructed his accountants to study the risks and the overall appropriateness of dropping the price for the X backpack even lower, below the average variable cost of production, in case Juicy and Fresh will react to the original price adjustment of january 2011.
Second, the German and Italian retail stores which by their own choice stock the Frizzz apple juice in the same conditions as they stock the Juicy and Fresh orange juice will be supplied with smaller quantities of the items requested.
Open question 1a
Have X, Y and Z breached the provisions of Article 101 TFEU in any way between 2008 and 2010?
Open question 1b
Are the marketing policies implemented by X in the first three months of 2011 in breach or Article 102 TFEU.
Open question 1
Identifying X, Y and Z as being undertakings
Art. 101:
Definition of the relevant market: product and geographical
Juicy and Fresh: cartel-like behaviour / concurrence of wills? / exchange of sensitive information
Juicy, Fresh and Frizzz: concerted practice / steady increase in price for the orange juice
Object – effect, intra-community trade, appreciability – 5 points
Art. 102:
Dominance - Predatory pricing
Dominance - Reduction of output / Dissimilar conditions
Effect on trade
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