Body Shop faces lawsuit

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The Independent Online
THE High Court will decide this week whether Body Shop has breached European law for failing to supply companies that control more than half its franchises in Austria.

The court will be asked for an injunction, forcing Body Shop to supply products immediately because the Austrian business fears it will run out of grapefruit bath oil, jojoba face cream and nettle soap before the Christmas rush.

The landmark case, which goes before the courts on Friday, has been brought by Peter Sockel, an Austrian businessman who, through his two companies, Aboco and Sockel, controls both the head franchise for Body Shop and 10 of its 19 outlets in the country.

He claims that Body Shop International, the subsidiary of Anita Roddick's group which controls the worldwide franchises, is trying to force him to sell his assets for a pittance.

Mr Sockel says that as part of its campaign, Body Shop has stopped supplying him with the company's products, in breach of Article 82 of the Treaty of Rome, which governs trade between members of the European Union.

In a detailed writ, lodged with the High Court, Mr Sockel explains how he has had business dealings with Body Shop for 13 years, ever since he set up the company's first Austrian outlet in Vienna. He purchased the Hungarian and Austrian head franchise in 1994.

He said he had a good business relationship with Body Shop until November last year when Body Shop said that it wanted to take control of the supply to the Austrian shops, so cutting out the head franchise.

Mr Sockel said he entered into talks with Body Shop about a deal over the Austrian franchises, but these broke down earlier this year.

Body Shop has a stated policy, brought in by Patrick Gournay, the new chief executive, to tighten up the company's distribution network. This was launched in the wake of its financial problems. The group saw its profits drop 91 per cent in the most recent financial year.

The policy has led to rows with several Body Shop franchisees. Two legal actions, one with a franchisee in Slough, the other with one in the US, were settled earlier this year.

Body Shop has retained a leading QC, Stanley Burnton, to defend itself in the latest action, but was not prepared to comment on the case.