Introduction: Does Starbucks constitute a monopoly? Is Shuixing's complaint established?
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Author | Economic Observer reporter Wang Xiaohui Wen Shuping
Today (May 15th), Luckin coffee (Coffee) released an open letter and declared a "declaration of war" to Starbucks. In the open letter, Ruixing Coffee “painfully complained” that Starbucks was suspected of monopolizing the coffee chain market and engaged in unfair competition. The property and the supplier were required to cooperate exclusively and “one team” was selected.
Ruixing Coffee stated that Starbucks will allegedly violate the “Anti-Monopoly Law,” complain to the national anti-monopoly administrative law enforcement agencies, and formally initiate a lawsuit against the relevant People’s Court of the city.
In this regard, Starbucks said that it has no intention of participating in market speculations of other brands, welcomes orderly competition, promotes each other, and innovates continuously.
Ruixing Coffee: Starbucks allegedly monopolize
will be Court Prosecution
“At the moment, we have received notice that some of our partners are about to stop the supply, because Starbucks puts pressure and requires suppliers to form a team. We are prepared for this. The lawsuit was filed.” At the launch of Ruixing Coffee, Guo Xingyi, the vice president of Ruixing Coffee, claimed that Starbucks’ suspicion of monopoly over ways to exclude competition impaired the fair competition in the coffee industry and also undermined the interests of Ruixing Coffee.
Rui Xing Coffee Counsel, King & Wood Partners Li Zhongsheng believes that Starbucks is suspected of monopolization and impairs the fair competition in the coffee industry. Ruixing Coffee plans to go to the relevant law on Starbucks' alleged monopolyThe court filed a civil lawsuit and simultaneously filed a complaint with the national anti-monopoly administrative law enforcement agency requesting the judicial and law enforcement agencies to order Starbucks to immediately stop the monopolistic conduct, including but not limited to the immediate release of the exclusive terms signed with the opposing party to the contract, and not to continue to work with the contract. Sign exclusivity clauses that exclude and restrict legitimate competition. At the same time, Ruixing Coffee will continue to work closely with potential store rental owners and raw material suppliers in the future to collect evidence of Starbucks' alleged monopolistic behavior and based on the new facts, to exercise the right to appeal and request in due course.
Starbucks: Welcome to Orderly Competition
No intention to participate in market speculation from other brands
Does Starbucks constitute a monopoly? Is Shuixing's complaint established? “It depends mainly on whether or not Starbucks has a dominant position in the relevant market. Is there any justification for the behavior?” a lawyer in the commercial monopoly told Economic Observer Online. “There should be a lot of relevant geographical markets, and there may be more in each city.” A related geographic market cannot be simply seen from China.”
Actually, this war appeared a few days ago. According to rumors circulating on the Internet, Ruixing Coffee has aggressively digged people from Starbucks and has even tripled its salary. Starbucks personnel have lost a lot. Starbucks global executives made an unannounced visit to the Ruixing coffee shop and arranged a counterattack task, asking the partners to “choose one” and discuss the take-away business with the US delegation. For these rumors, Starbucks responded to the Economic Observatory on the 14th, saying that it "will not comment."
For the open letter of today's Ruixing coffee, Starbucks responded to the Economic Observatory, saying: “There is no intention to participate in market speculation by other brands.”
Starbucks responded and said: “The Chinese coffee market is huge With ample competition and rapid development, Starbucks has had the privilege of participating and witnessing the cultivation and expansion of China's coffee market in the past 20 years, working with many industry partners to develop long-term cooperation, and working side by side with 45,000 employee partners to establish mutual trust. We have always been working together to bring a premium Starbucks experience to each Chinese consumer, each cup and every community.”
“We don’t intend to participate in market speculations of other brands. We welcome orderly competition.This promotion, continuous innovation, continuous improvement of quality and service, and creation of real value for Chinese consumers. Starbucks said.
Appendix: A brief introduction of Ruixing Coffee's legal action against Starbucks's alleged monopoly behavior
According to the authority of the world's leading market research agency, EuroCore According to international statistics, in the two most recent years of 2016 and 2017, the market share of Starbucks' service in Chinese cafes was 57.5% and 58.6%; in the market served by chain cafes, its share was as high as 78.8. % and 80.7%; the number of stores accounted for 58.6% and 61% of the total number of chain cafes; the total transaction volume accounted for 71.4% and 73.3% of the service market of chain cafes, according to Article 19 of the Anti-Monopoly Law. With a market share of one-half in the relevant market, the operator can be presumed to have a dominant market position.Starbucks has a dominant market position in the coffee shop service market, especially in the chain coffee shop service market.
Operators with market dominance will be subject to more obligations under the law.Article 14 of the Anti-Monopoly Law states that operators must not enter into an exclusive "exclusive purchase" agreement with counterparties to transactions. , with the city The dominant operator must not restrict the transaction counterpart to trade with itself without justification.
This year, Ruixing Coffee has tried to engage some high-end companies in some central cities in order to carry out chain operations. Owners of commercial office buildings wish to lease their unused commercial areas for the establishment of a chain of coffee shops, but when they negotiate, they are told by these owners that because Starbucks has exclusive terms in the previous “store lease” signed by Starbucks, it is free. The area can not be leased to competitors in the same industry.In addition, there are a number of suppliers of machinery and equipment, packaging materials, and food ingredients in the near future. Starbucks has ordered that it must carry out "two-in-one" type of station, which is to serve Starbucks suppliers. , may not provide or provide services to other competitors in the same industry.
Conclusive evidence that Starbucks uses its preemptive and dominant market position to enter high-end commercial office buildings and sign a “shop lease” with the owner. ” When a large number of self-prepared format contracts were used, strict remarks were made on exclusive terms. Including asking the lessor to ensure that it does not exist in the rental area: 1. The name of the trade name or store includes"Brown" any business. 2, the sale of independent brands of coffee beans, coffee or coffee brewing of the shops or stalls. 3, no independent coffee brand, but more than 30% of operating income from coffee for a month Shops or stalls selling beans, brewed coffee or coffee beverages, etc. 4. Operating chain cafes in listed lists such as Costa, Pacific Coffee, MAAN coffee, C. Straits Cafe, etc.
The exclusive terms of Starbucks set the same obligations for owners who sign a “store lease”: the limited counterparty can only engage with Starbucks for the lease of the store during the lease term. With Starbucks entering into a store lease, it is not allowed to conduct transactions with the operators of other cafe services, otherwise it will constitute a breach of contract and must bear the liability for breach of contract.
In accordance with Article 14 of the Anti-Monopoly Law, Starbucks In the form of a “store lease” contract, it was categorically ruled out that other competitors in the same industry were stationed in the exclusive business of their exclusion zone, which was exclusive “exclusive purchase”. Due to the conclusion of a vertical non-price monopoly agreement, Starbucks has huge financial and technical conditions and has the ability to effectively control the chain cafe service market and the raw material procurement market. Planning and layout, step-by-step implementation, construction of the network system of the Starbucks chain cafe service, on the other hand, an exclusive "exclusive purchase" approach, the establishment of a closed-loop structure, through the "store lease" constrain the other party to squeeze out their competitors, leveraging The lessor conducts its market power, hinders legitimate competition, and establishes an oligarchic status.According to Article 17 of the Anti-Monopoly Law, Starbucks' exclusive agreement with the counterparty of the transaction restricts the counterparty to deal only with Starbucks. It is also suspected of constituting an abuse of market dominance that is prohibited under the Anti-Monopoly Law. We believe that Starbucks’ unilaterally setting out exclusive terms in a format contract is not a problem of increasing the threshold of competition for the service of chain cafes, but that it enters first. Within the region, the "two elections" The system completely forbids the existence of competitors in the industry, and in terms of nature and degree, it has exceeded the standard of restricting competition in general and has reached the level of excluding competition.
In view of Starbucks's alleged monopolistic behavior, it hurts the coffee industry. The fair competition order also hindered Ruixing coffeeDue to its legitimate business activities, Ruixing Coffee intends to file a civil lawsuit against the relevant court for Starbucks' alleged monopoly, and at the same time lodge a complaint with the national anti-monopoly administrative law enforcement agency, requesting the judicial and law enforcement agencies to order Starbucks to immediately stop the monopolistic conduct, including but not It is confined to the immediate release of the exclusive terms signed with the counterparty of the contract, and shall not continue to sign exclusive clauses with the counterparty of the contract to exclude or restrict legitimate competition. At the same time, Ruixing Coffee will continue to work closely with potential store rental owners and raw material suppliers in the future to collect evidence of Starbucks' alleged monopolistic behavior and based on the new facts, to exercise the right to appeal and request in due course. Prosecutions and complaints are not ends in themselves. Our purpose is to use this as a means to curb monopolistic behavior, purify the market environment, maintain the order of competition, and promote the healthy development of the Chinese coffee industry.
Rui Xing coffee entrusted lawyer, partner of King & Wood Mallesons Law Firm
May 15, 2018
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