MEXICO: Antitrust ruling goes against Coca-Cola
The Federal Competition Commission ordered the company to terminate its effective exclusivity contracts with neighbourhood stores. It said that Coca-Cola had illegally prevented thousands of local stores from selling other competing brands. However, no fines were imposed on Coca-Cola or its bottlers.
The decision comes after a wide-ranging investigation, first initiated in August 2000 after a complaint from PepsiCo.
However, Coca-Cola could appeal against the ruling which would delay proceedings by a further three months. Moreover, analysts have suggested the Atlanta-based group could tie the matter up in further litigation for several years if it wished.
Coca-Cola is currently reviewing its position. "We respect the decision of the competition commission, and will take time to review it before determining next steps," a Coca-Cola spokesperson said.
Mexico is not only Coca-Cola's second largest market outside the US but also its number one market in terms of per capita consumption. The company has a 72% share of the CSD market and the majority of its sales come from small local stores. The company offers these stores, some the size of just one room, a free refrigerator, a Coke sign and other merchandise in return for exclusivity.
Coke was asked to cease signing new exclusivity deals by the commission last year but refused to do so, obtaining court injunctions to continue its business as before. Interestingly, PepsiCo also uses such exclusivity deals but does not fall foul of the law because it does not have a dominant market position.
PepsiCo spokesman, Charles Nicolas, said: "This decision represents a victory for Mexican consumers and fair competition in the Mexican soft-drink market."
- Pernod Ricard 's first-half results - Preview
- Carlsberg's Q4 & full-year results - Preview
- Pernod Ricard's H1 performance by region - Focus
- Carlsberg's full-year performance by region
- Heineken's FY performance by region - Focus
- Asahi Group lines up Grolsch, Meantime, Peroni buy
- Diageo completes wine category exit in US
- Beam Suntory targets Kenya with Edrington/FIX
- SABMiller's Europe chief to join Britvic board
- Asahi Group to buy Grolsch, Peroni from SABMiller