Coca-Cola, European Commission reach antitrust settlement
June 22, 2005
by FoodBusinessNews.net Staff
ATLANTA and BRUSSELS — The Coca-Cola Co. and the European Commission today reached an antitrust settlement under which Coca-Cola will avoid a fine but must change its practices. The agreement ends a six-year E.U. investigation.
Coca-Cola officials said they welcomed the decision.
"We now have clarity regarding the application of European competition rules to our commercial practices," said Chairman and Chief Executive Officer Neville Isdell.
The European Commission said the agreement would increase consumer choice in shops and pubs by, for example, preventing Coca-Cola from entering into exclusive agreements, offering target or growth rebates or forcing retailers to take less popular products with its stronger brands.
Competition Commissioner Neelie Kroes said, "This decision will benefit consumers by improving competition in the markets for carbonated soft drinks in Europe. Thanks to the Commission’s decision, consumers will be able to choose from a larger range of fizzy drinks at competitive prices."
The Commission said the agreement, which covers Coca-Cola and three major bottlers, relates to carbonated soft drinks (C.S.D.s) and provides:
• No more exclusivity arrangements. At all times, Coca-Cola customers will remain free to buy and sell carbonated soft drinks from any supplier of their choice. Where large, private sector customers or public authorities organize a competitive tender for their supplies and Coca-Cola provides the best offer, it can be the only C.S.D. supplier.
• No target or growth rebates. Coca-Cola will no longer offer any rebates that reward its customers purely for purchasing the same amount or more of Coca-Cola’s products than in the past. This should make it easier for Coca-Cola’s customers to purchase from other C.S.D. suppliers if they so wish.
• No use of Coca-Cola’s strongest brands to sell less popular products. Coca-Cola will not require that a customer that only wants to buy one or more of its best-selling brands (e.g. regular Coke or Fanta Orange) also has to purchase other Coca-Cola products, such as its Sprite or its Vanilla Coke. Similarly, Coca-Cola will no longer offer a rebate to its customers if the customer commits to buy these other products together with its best-selling products or to reserve shelf space for the entire group of products.
• Free space of 20% in Coca-Cola’s coolers. Where Coca-Cola provides a free cooler to a retailer and there is no other chilled beverage capacity in the outlet to which the consumer has a direct access and which is suitable for competing C.S.D.s, the outlet operator will be free to use at least 20% of the cooler provided by Coca-Cola for any product of its choosing.
The Commission’s decision covers the EU, Iceland and Norway and will be binding upon Coca-Cola until Dec. 31, 2010. During this period, the commitments will be applicable in those countries where Coca-Cola has a particularly strong market position, and each year, a list of countries where the commitments apply will be published on the Commission’s and Coca-Cola’s web sites.
The Commission could impose a fine amounting to 10% of Coca-Cola’s total worldwide turnover if Coca-Cola breaks its commitments.