ACME Limited (ACME), a company registered in a Member State of the EU (the Republic of Ireland), is a manufacturer of laminated wooden beams, which are highly regarded for their ruggedness and strength.
ACME’s main buyers, who are located in Ireland, France and Spain, use the laminated wooden beams as a key element in the construction of non-steel framed commercial buildings. ACME uses only bur oak trees for the laminated wooden beams.
Bur oak is widely acknowledged in the commercial building industry as the best wood for use in laminated wooden beams with its high strength and integrity. However, there are other timbers available within the EU; but only one forestry firm, Coyote GmbH (Coyote), grows bur oak. Coyote is incorporate in Germany.
Coyote’s market share of the EU-wide bur oak market is 42 per cent and it has 15 per cent of the overall EU-wide timber market. Another German company, Strassenlälufer GmbH (Strassenlälufer), has 20 per cent of the EUwide bur oak market and 11 per cent of the overall EU-wide timber market. For the last 20 years the market share of these two companies (Coyote and Strassenlälufer) has remained constant. Between them, both companies grow and supply 80 per cent of the bur-oak seeds and seedlings. Also, for the last 15 years they have agreed not to licence the sale of bur oak seedlings to anyone else.
ACME bur oak supplies from Coyote for many years as importing bur oak from wood mills in the USA, where it is widely grow, would be prohibitively expensive.
As a result of the recession in the building industry in 2020, Coyote has recently reviewed its sales strategy and has decided to appoint exclusive distributors of bur oak in respect of each Member State of the EU rather than selling directly to the end-user manufacturers. As part of its revised sales strategy, Coyote has retained a local company to distribute bur oak in the market in the Republic of Ireland. The local company is name HS Limit (HS) and is incorporate and register in the Republic of Ireland.
Coyote, in its distributorship agreement with HS, has included a term in the agreement requiring HS to include. In its contracts with its customers. That those customers must agree not to on-sell the unprocessed bur oak to other customers anywhere in Ireland or in another Member State. Coyote has not imposed a similar restrictive term on any of its other exclusive distributors in other markets. Another clause in the distributorship agreement, between Coyote and HS. Is to the effect that HS may only sell bur oak to manufacturers of wooden beams in the Republic of Ireland at a specified minimum price. HS, in its pricelist, is asking ACME to pay triple the price that it has paid to Coyote in previous years.
ACME thought that these changes in contractual terms and pricing are unfair and the conditions which Coyote’s subsidiary (HS) impose were unacceptable. ACME tried to use alternative wood for some laminated wooden beams. It produced these alternative laminated wooden beams as samples for potential buyers; however, the laminated alternatives did not have the structural integrity of those made from bur oak.