Firm sues Irish Sugar over market distortion claims

A SUGAR company is seeking multimillion-euro damages, including punitive and aggravated damages, for losses allegedly sustained as a result of Irish Sugar plc's abuse of a dominant market position during the 1990s.

Gempack Foods Ltd (GFL), which was established in 1992, sustained the losses over the years 1993 to 1999 as a result of various abuses by Irish Sugar, the High Court was told yesterday.

Once the abuses were halted by the European Commission, Gempack's business came back on track. Today it employs 69 people and has a turnover of €28.7 million, Brian Murray SC, for the company, said.

Counsel was opening GFL's action before Mr Justice Liam McKechnie, which is expected to run for four weeks.

The action arises following the European Commission's 1997 finding that Irish Sugar, which then had more than a 95 per cent share of the Irish market, abused its dominant position in the 1980s and 1990s by engaging in practices such as selective pricing, export rebates, price discrimination against competing sugar packers, target rebates and selective pricing for industrial sugar.

All but one of those breaches were upheld when the decision was appealed to both the European Court of First Instance and the European Court of Justice, which ruled on the matter in 2001. The defendant was fined €8 million by the commission, reduced on appeal to €7.8 million.

Yesterday, Mr Murray said the damages sought were a result of the defendant's abuse of its dominant position in the market here for the sale of industrial and retail sugar over a period from 1993 to 1999. Many of the abuses were the subject of binding decisions by the European courts, he argued.

He said Irish Sugar was the sole supplier of industrial sugar to Gempack during the period 1993 to 1997 and was also a competitor with his client in the market for retail sugar. When Gempack entered the market in 1993, Irish Sugar had responded by "squeezing it at either end".

Among the complaints against Irish Sugar were that it targeted Gempack's customers by offering rebates and lump sums to stock more of Irish Sugar's product, counsel said.

Irish Sugar's core retail product was the 1kg Siucra bag, and Gempack was confident it could compete with that, he said. Gempack entered the market in June 1993 with considerable success for a time until Irish Sugar began the activities complained of.

Gempack complained to the European Commission in early 1994 and other companies also complained, but the abuses did not cease until after the commission's decision was issued in May 1997.

The court would hear evidence from buyers for the major retailers, including Dunnes Stores, about how the offers and actions of Irish Sugar prevented the retailers taking up the Gempack product, counsel said.

Irish Sugar denies the claims and also pleads the action is brought outside the legal time limits. The company denies the European Commission and court decisions have the meanings alleged by Gempack, confer any cause of action on Gempack or preclude Irish Sugar from defending the claims.