In the French Nestlé water case, the following arguments were made by the company:
The administration, which bears the burden of proof under the provisions of Article 57 of the General Tax Code, of paragraphs 38, 39 and 42 of the Instruction 13 l-7-98 of 23 July 199 8 and case law, does not establish the presumption of indirect transfer of profits abroad that would constitute the payment of a fee to the Swiss companies A … SA, company products A … SA and Nestec SA.
The mere fact that the association of the mark A … with the mark Aquarel also benefits company A … SA, owner of the mark A …, does not allow to prove the absence of profit and thus of consideration for NWE. The latter company also benefited from the combination of the two brands.
Advertising alone are not enough to characterize an indirect transfer of profits abroad; in any case, the administration does not provide any quantified data and in particular no comparable study to assess the amount of the benefit that A … SA derives from the “co-branding” operation.
In any event, and assuming that the Court considers that the administration has provided a presumption of proof of indirect transfer of profits abroad, it justifies that NWE benefited from an effective and sufficient counterpart in payment of the royalty to the company A … SA because the global economy of the royalty agreement perfectly respects the interests of the company NWE.
The fee mainly pays for the use of the A brand, which has a value in the global agri-food market, of which bottled water is a sub-category; the European Commission notes in its decision of 22 July 1992 (Case No IV / M.190 -A …- Perrier) that the European bottled water market is extremely competitive. Only well-known brands can reasonably expect to survive in the medium to long term and, especially in France, it is important to associate bottled water with notions of health and healthy living during actions.
Advertising; Although the A mark was not directly associated with the bottled water market at the time, it is recognized in the food industry as a quality brand, embodying health and lifestyle values, at a reasonable price and should, by associating it with the Aquarel brand, facilitate NWE’s access to the market.
The Danone group also chose to join the Taillefine brand when it launched a new brand of water on the market. In this regard, the interview of the Chief Executive Officer of Perrier-Vittel, now A … Waters, carried out in 2001 on Group A’s strategy …, is taken out of context and can not be accepted by the Court. The fee also remunerates the costs of technical assistance and know-how under Article 26 of the contract, which is provided by A … Waters Management and Technology.
Finally, the fee also remunerates the risks taken by the owner of the brand A … by associating the name A … with bottled water.
The court ruled in favor of Nestlé.France vs Nestle_18_02_2014 CAA no _11VE03460