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

I consider that Cabo is correct to describe MGA’s conduct as, taken together, an overall campaign to exclude Worldeez from the market. While MGA in its submissions has sought to compartmentalise the different elements of the conduct referred to by Cabo as separate types of alleged abusive conduct, I do not think that such compartmentalisation is necessary or indeed appropriate. On the basis of the facts described above the threats of litigation and disparagement of Worldeez as a “knock off” should not be seen as freestanding aspects of MGA’s conduct, but as an integral part of MGA’s threats to withdraw supply of LOL Surprise. Taken as a whole, MGA’s conduct amounted to a strategy to ensure that the Worldeez globe was not sold in any of the major toy retailers in the UK.

It is apparent that within minutes of receiving Mr Laughton’s first email forwarding the Tiana Worldeez unboxing video, Mr Larian embarked upon a campaign designed to exclude the Worldeez globe from the market, by making clear that he would withhold supplies of LOL Surprise from any retailers who stocked the globe. Those threats were accompanied by repeated claims that the Worldeez product was a “knock off” of LOL Surprise and infringed MGA’s intellectual property rights including (in particular) patent rights, and that MGA was going to take, or was in the course of taking, action to protect its rights.

MGA thereby used its complaints of copying and its purported legal action against the suppliers of Worldeez as the purported justification for its threats of refusal to supply LOL Surprise, and as a means of reinforcing those threats. That can be seen in Mr Larian’s communications to the toy retailers which repeatedly made claims of infringement of MGA’s intellectual property rights, referring in particular to his patent claims, as the explanation for and basis of MGA’s refusal to supply policy. It was also evidently the reason why Mr Larian forwarded MGA’s cease and desist letter to the Grants. (I return to this point, specifically in the context of the patent infringement threats, at §§485–491 below.)

The deterrent effect of MGA’s conduct was also reinforced by the fact that the retailers were well aware that MGA’s refusal to supply policy was being applied across the board, to any retailer that stocked the Worldeez globe, not least because they were told that expressly by MGA (see the emails at §§122, 125 and 137 above).

As described above, MGA’s exclusionary strategy was highly effective: Gary and Stuart Grant at The Entertainer, who had been supportive of the Worldeez product from the outset and which had already placed an order, capitulated within a day and agreed to cancel their order for the globe. The Entertainer ultimately only stocked the 5- and 10-packs, and the blind bags which were sold there in place of the globe. TRU, which had held initial discussions with Cabo, did not go on to stock any of the Worldeez range. Smyths, for which the discussions had progressed to indications of initial order quantities, likewise did not ultimately stock any of the range. The Worldeez globe, which was the anchor product of the Worldeez range, was thus completely excluded from the stores of the three main toy retailers in the UK.

It appears that Mr Laughton also procured agreements from (at least) Argos and Tesco that they would not stock the Worldeez globe. While it is unclear whether they would otherwise have stocked Worldeez, it is apparent that MGA sought to ensure that the globe was excluded not only from the main toy retailers but also from other more general retail outlets. Again, neither retailer went on to stock any of the Worldeez range. It is also evident from the email exchanges between Mr Larian and Mr Laughton that Mr Larian brooked no exception whatsoever to his policy: see for example Mr Larian’s email to TRU on 24 May 2017 stating that “We will stop shipping original LOL to any retailer who supports knock off”, and his subsequent instruction to Mr Laughton “They buy this knock off and we will stop shipping. No exceptions” (§§137–138 above).

Notably, no threats were made to B&M at the time when the Worldeez globe was launched there, presumably because B&M (unlike the other retailers which MGA had contacted) was a discounter which was not, at the time, stocking LOL Surprise. MGA could not, therefore, exert any leverage over B&M by threatening to withhold LOL.

MGA’s conduct was clearly motivated by a desire to eliminate the competitive threat posed by Worldeez. Mr Laughton’s comment to Mr Larian on 1 July 2017 “really don’t want them in my market” (§160 above) speaks for itself. Mr Laughton’s email to his colleague Ms Rubio, noting that Worldeez was only being sold in B&M, and commenting that as MGA was the leading brand in they UK, MGA was “making it extremely hard for [Worldeez] to try and get real estate” (§167) is also revealing: it shows that Mr Laughton was well aware that MGA was using its market power to try to exclude Worldeez from the market.

I do not accept MGA’s submission that it is relevant to the analysis to consider how successful Worldeez would have been but for MGA’s conduct, assessing on a trader by trader basis what orders would have been placed in the counterfactual. That would be to conflate the analysis of liability under the Chapter II prohibition/Article 102 TFEU with the issue of quantum. For the purposes of considering whether MGA’s conduct was abusive, it is sufficient to show that its conduct was capable of hindering the maintenance or the development of competition in the relevant market.As set out at in the Commission’s Article 102 guidance and draft Article 102 guidelines, cited at §§309–310 above, an anticompetitive effect can be inferred where the dominant undertaking’s conduct can only raise obstacles to competition and creates no efficiencies, such as an inducement to a customer to delay the introduction of a competitor’s product.

In the present case, MGA’s threats to withdraw supply, reinforced by the accompanying threats of litigation and claims that Worldeez was a “knock off”, were obvious and undeniable obstacles to competition, and precisely the sort of exclusionary conduct which has been consistently regarded, in the case-law set out above, as an abuse of a dominant position. MGA went far beyond simply attempting to delay the introduction of Worldeez products; rather, MGA completely prohibited its customers from stocking the Worldeez globe, if those customers wished to retain any supplies of LOL Surprise. It is clear that such conduct falls outside the scope of competition on the merits, and that its anticompetitive effect can be inferred. MGA notably did not seek to suggest that its conduct was not capable of restricting competition. That is not surprising: as set out above, the evidence makes clear that MGA’s conduct did indeed have exactly the exclusionary effect that MGA intended.

It is therefore not necessary to consider whether MGA’s threats of litigation and disparagement of the Worldeez product might also be regarded as separate abusive conduct. The better analysis is that that conduct was combined with the threats of withdrawal of supply to constitute an overall strategy of excluding Worldeez from the market.