Beverages giant Coca-Cola Company is under investigations for uncompetitive behaviour in over 19 African countries in what could force the firm to reverse its bottling and distributor agreements.
The Comesa Competition Commission (CCC) said it had reason to suspect that the soft drink giant had inked agreements with some of its African bottling plants and distributors to exclude rivals from key market routes.
The effect of such restrictive conduct, the competition watchdog said, was to stifle competition and reduce trade within the 19-member common market. Kenya is also a member of the Common Market for Eastern and Southern Africa (Comesa).
“The commission has reason to believe that The Coca-Cola Company has concluded restrictive bottler’s and restrictive distribution agreements or arrangements with affiliates in Africa which affect trade between member states,” the commission’s chief executive, Willard Mwemba, said in a notice dated October 14.
The Coca-Cola Company (TCCC), which is in more than 200 countries, is the world’s largest beverage maker with a market valuation of $303.15 billion (Sh39.1 trillion).
In Africa, the Atlanta-based beverage maker operates through Coca-Cola Beverages Africa (CCBA), serving 15 countries in sub-Saharan Africa.
“The Commission will assess the conduct of The Coca-Cola Company to determine its effects in the common market and apply appropriate measures as provided in the Regulations,” said Dr Mwemba.
The Comesa competition watchdog says in the public notice that the investigations seek to establish potential violation by the company of Article 16 of the regulations.
Article 16 prohibits all agreements which may affect trade between member states and have as their object or effect the prevention, restriction or distortion of competition in the common market.
The law requires the commission to complete its investigation within 180 days after issuing the notification to the suspected company “unless it determines that a longer period is necessary.”
The commission, however, sought to clarify that Coca-Cola is not guilty of these accusations and that they were only being investigated.
The Kenya office of Coca-Cola did not respond to request for comment.
This is not the first time the commission is investigating Coca-Cola for anti-competitive behaviour, having found several agreements that CCBA signed with independent distributors for distribution to TCCC products in different pack sizes in Comoros, Ethiopia and Uganda to have anti-competitive effects in the market.
Last year, Coca-Cola avoided a fine of up to Sh10 million or cancellation of its Sh10.7 billion acquisition in three soda bottling firms from Centum Investment after Kenya’s competition watchdog accused it of flouting one of the regulatory conditions linked to the approval of the deal.
The Competition Authority of Kenya (CAK) revealed that Coca-Cola Sabco (East Africa), which is indirectly owned 66.5 percent by the US soft drink giant, had stopped retailers from stocking drinks from rival firms in its branded fridges.
As part of the terms of the 2019 acquisition, Coca-Cola had been directed to allow rival firms to use its coolers, failing which the deal would be revoked.
The CAK accused the company of breaching this agreement, triggering a warning from the competition watchdog. Coca-Cola complied by amending the cooler agreements.
The Comesa Competition Commission notes that the commencement of investigations neither presupposes that the conduct being investigated has been determined as anti-competitive nor The Coca-Cola Company has violated the regulations.
“The Commission will , in accordance with the provisions of Part 3 of the Regulations, conduct an enquiry to determine whether the alleged conduct has as its object or effect the prevention, restriction or distortion of competition in the Common Market or in a substantial part of it,” said Dr Mwemba.
TCCC, which is listed on the New York Stock Exchange (NYSE), has operations in Africa through CCBA.
In April 2021, TCCC and CCBA announced plans to list CCBA as a publicly-traded company, with TCCC intending to sell a portion of its shareholding in CCBA via an initial public offering (IPO).
CCBA accounts for 40 percent of all Coca-Cola volumes sold in Africa, with 40 bottling plants serving over 720,000 customer outlets.
