In the absence of a contractual obligation to supply goods or services, there may be competition law grounds upon which a supplier can be forced to supply or continue to supply goods or services to new or existing customers. This can be the case where the supplier is in a dominant position in the market and the refusal to supply is for reasons that are not objective: for example where the reason is to remove a downstream competitor from the market.
A refusal to supply need not be an outright refusal. It could be an unreasonable increase in price or imposition of unreasonable conditions that make it economically unviable for the customer to compete.
In the table below we have outlined a number of do’s and don’ts that a party should bear in mind in the run up to a potential refusal to supply, or where there is a dispute over the requirement to supply a customer.
DO DONT
Pre-refusalPre-refusal
Suspend your document and data destruction policy immediately.
Prepare for all eventualities and have a press strategy in place to avoid any unfavourable spins being put on events.
Destroy, amend or annotate any important documents.
Post-refusalPost-refusal
Instruct your legal team as soon as possible.
Consider whether interim relief is necessary, such as injunctive relief, in order to continue the supply on reasonable terms until the issue has been resolved by the court.
Consider whether a compromise can be reached for example a phased transfer or gradual reduction in supply.
Document all negotiations.
Consider any PR implications of litigation and what information, if any, can be given and when to avoid any unfavourable spins being put on events.
Explain what you are doing to resolve the problem.
Consider relieving financial pressure or offloading your litigation costs through third party funding and/or after-the-event insurance.
Start collating data and relevant information as soon as possible.
Delay – take action as soon as possible.
A refusal to supply need not be an outright refusal. It could be an unreasonable increase in price or imposition of unreasonable conditions that make it economically unviable for the customer to compete.
Destroy, amend or annotate any documents as this could be detrimental to the case and lead to the court drawing adverse inferences.
Create any new (non-privileged) documentation relating to the issues in dispute.
Refuse to engage with the other parties in anything but a transparent fashion (subject to the relevant confidentiality procedures being in place).
For more information on litigating refusal to supply cases please see the second webinar in our Competition Law series or contact John Schmidt or Hayley Pizzey.