AB Gee
AB Gee
Cabo contends that MGA also coerced AB Gee, a toy wholesaler, into dropping Worldeez from its range. It relies on an email to Mr Laughton from Alan McKellar, the general manager of sales at MGA, in June 2018 stating that “AB Gee are well briefed and understand we can remove their distribution agreement at any time, last year they removed Worldeez from their range as per my request”. Mr Michaelson also said that he had been told in around July 2017 that AB Gee had been threatened by MGA and would not be buying any more Worldeez, and were taking the product off their website.
Mr Hunter, the co-owner of AB Gee, was adamant that no-one from MGA ever reached any kind of agreement with him about AB Gee not stocking Worldeez. Indeed, his evidence was that AB Gee’s internal records showed that it had taken stocks of the Worldeez globe, 5-pack and 10-pack in July and August 2017, and that the product was sold by AB Gee until May 2018. He said that AB Gee had not ordered more stock of Worldeez simply because the product wasn’t selling; and that from its initial purchases in July 2017 through to December 2017 AB Gee was never out of stock of any of the Worldeez range. The product was then removed from AB Gee’s ongoing range at the end of 2017. He maintained that if the product had taken off AB Gee would have bought more. He was not able to comment on whether Worldeez was removed from AB Gee’s website, but did not believe that this would have made a difference to sales.
As I have already noted, Mr Hunter was a straightforward witness and I accept his evidence. There is no direct contemporaneous evidence of a threat made to AB Gee, or that AB Gee responded by refraining from placing further orders for the product that would otherwise have been made. Nor has any evidence been adduced as to any changes made to AB Gee’s website. Mr Hunter’s evidence as to the reasons for AB Gee’s failure to re-order Worldeez after the summer of 2017 was entirely credible. I do not, therefore, make any finding of threats made by MGA to AB Gee.
- Heading
- INTRODUCTION
- THE EVIDENCE OF FACT
- MGA’s witnesses of fact
- Mr Larian’s breaches of purdah
- THE EXPERT EVIDENCE
- The economic and valuation experts: preliminary comments
- Assessment of the economic and valuation evidence
- The Decision Tree Model (DTM)
- ISSUES
- FACTUAL BACKGROUND
- The UK toy industry
- Table 1: NPD dolls classifications
- MGA and LOL Surprise
- Section 14
- The founding of Cabo and development of Worldeez
- Section 16
- The initial marketing of Worldeez
- Discussions with the launch retailers
- The Entertainer
- Toys R Us
- Smyths
- Other retailers
- MGA’s intervention
- Contacts with Cabo and Singleton
- The Entertainer
- Toys R Us
- Smyths
- B&M and other retailers
- AB Gee
- Worldeez repackaging and relaunch
- Launch of Worldeez globe in B&M
- Decline in B&M sales after August 2017
- Sales to other retailers
- Licensing and international distribution
- Nickelodeon advertising
- Demise of Cabo
- PROCEDURAL BACKGROUND
- ABUSE OF DOMINANCE CLAIM
- The relevant market definition
- The parties’ submissions
- Mr Colley’s approach
- Mr Parker’s approach
- Section 44
- Conclusions on market definition
- Whether MGA was dominant on the relevant market
- The parties’ submissions
- Table 2: 2017 market shares for Colley and Parker markets (%)
- Table 3: Parker market share estimates for 2018–19 (%)
- Table 4: 2017 market shares for extended Colley market (%)
- Market shares
- Figure 1: Colley diagram of 2017 MGA and competitor market shares
- Competition from products outside the relevant market
- Barriers to entry and expansion
- Countervailing buyer power
- MGA’s conduct
- Conclusions on dominance
- Whether MGA’s conduct amounted to an abuse
- The parties’ submissions
- The overall exclusionary campaign
- MGA’s “response to commercial attack” argument
- MGA’s passing off defence
- Section 63
- Conclusion on abuse of dominance
- UNLAWFUL AGREEMENTS CLAIM
- Agreements with the toy traders
- Discussion and conclusions
- Anticompetitive object or effect
- Discussion and conclusions
- Exemption under the VBER
- Scope of the VBER
- Market share threshold
- Excluded restrictions
- Conclusion on the VBER
- Exemption under s. 9 / Article 101(3)
- Conclusion on the unlawful agreements claim
- PATENT THREATS CLAIM
- Threats of patent infringement proceedings
- The parties’ submissions
- Discussion
- “Person aggrieved”
- Conclusion on the patent threats claim
- CAUSATION AND QUANTUM
- Legal principles
- Quantification of the loss
- The approach to claims for lost profits
- Conclusions on the overarching approach
- Causative effect of MGA’s conduct
- Actionable damage and causation: Cabo’s heads of loss
- Whether Cabo would have traded profitably in the counterfactual case
- Product quality
- Section 92
- Marketing campaign
- Retailer support
- Business plan/financial projections
- Inventory management
- Working capital
- Toy expert evidence on commercial success
- Breakeven analysis
- Table 5: Volumes and working capital required to break even in 2017
- International sales
- Conclusions on whether Cabo would have traded profitably
- The parties’ quantum models
- Mr Colley’s quantum models
- Table 6: Cabo calculations of losses (£m)
- Assessment of Mr Colley’s models
- Mr Parker’s quantum models
- Table 7: MGA calculations of losses (£)
- Assessment of Mr Parker’s significant success model
- Table 8: Loss calculation for significant success model, comparing MGA and Cabo cost stacks (£)
- Assessment of Mr Parker’s moderate success model
- Figure 2: Parker moderate success model: average monthly revenue (£)
- Conclusions on the quantum models
- DECLARATORY RELIEF
- Conclusions
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