HP-2020-000016 - [2025] EWHC 1451 (Ch)

The history of MGA’s threats (veiled and explicit) to the main UK toy retailers upon the launch of Worldeez is set out above. It is very clear that MGA was able to threaten to withhold supplies from retailers – in the case of The Entertainer, suspending sales worth around $2m – because it knew that the demand for LOL Surprise was such that any supplies withdrawn from one or more customers could be rapidly reallocated to rival retailers. MGA’s threats were, moreover, highly effective, as set out above and also summarised below at §§321–322.

It is highly improbable that MGA would have felt able to behave in this way, but for its market power in the supply of LOL Surprise. Indeed it is quite apparent from (in particular) the exchange of emails with The Entertainer, between 23 and 31 May 2017, that The Entertainer’s decision not to stock the Worldeez globe was taken with great reluctance, following repeated objections from both Stuart and Gary Grant to MGA’s conduct. The Grants only capitulated because they were desperate to obtain supplies of LOL Surprise. MGA’s ability to compel The Entertainer, one of the leading toy retailers in the UK, to cease stocking a rival product, in the face of vehement opposition from The Entertainer, is (as Mr Colley noted) inherently demonstrative of its ability to act independently of competitors and customers. As the CAT commented in Genzyme (§259 above), the imposition by a supplier of terms that disregard the wishes of its customers is the “hallmark of dominance”.

Mr Parker’s reports surprisingly took no account of The Entertainer’s capitulation (or the agreements of other retailers not to stock the Worldeez globe) in his assessment of dominance. That cannot have been because Mr Parker did not want to get drawn into commentary on the facts: on the contrary, he referred to and commented on selected parts of Mr Grant’s evidence regarding its negotiations with MGA. Notably, when cross-examined, Mr Parker agreed that evidence of insensitivity of an undertaking to the reactions of its customers was relevant to the assessment of dominance:

“Q. And therefore evidence of insensitivity is relevant to dominance, yes?

A. I agree it is relevant, yes.

Q. Now, that’s irrespective whether or not insensitivity is also relevant to the abuse in question.

A. I understand that.

Q. So MGA’s strongarming of retailers is evidence of MGA’s insensitivity to customer reactions and is therefore relevant to dominance.

A. Correct.”

Following the exchange above, however, Mr Parker went on to suggest that MGA’s conduct did not in fact necessarily indicate dominance; rather, it simply indicated that MGA/LOL was more important to retailers than Cabo/Worldeez. That was not an analysis previously offered in any of the (numerous) reports filed by Mr Parker in these proceedings. Nor do I accept it as a matter of principle. The fact that one toy product is more successful (and hence more important to retailers) than another product does not automatically give the supplier of the more successful product the ability to exclude the less successful product from the shelves of all of the main toy retailers by threatening to withhold supply. Absent dominance, that strategy would be unsuccessful, or would at least carry a high risk of failure, because retailers would be able to switch to other products. The fact that MGA was (in this case) well aware that it could profitably sustain that strategy, because retailers had no adequate substitute, is compelling evidence of its market power, which supports the other indications of dominance set out above.

There was, moreover, no factual evidence of any similar strategy being adopted by a non-dominant toy supplier. Quite the contrary: Ms Munt said that during her 22 years of buying toys at Argos and Mothercare, she never had a supplier refuse, or threaten to refuse, to supply their toys to her on the basis of a stated belief that an item she had listed was a copy of one of their toys. Mr Mowbray also said that he was not aware of any other manufacturer refusing to supply their products because of a competitor product. The only evidence of any similar behaviour was a vague reference by Mr Grant in his cross-examination to “a situation exactly like that today with another manufacturer”. Mr Grant did not, however, provide any further details about this incident, so I do not consider that any weight can be placed on this comment.