Coca-Cola Antitrust Case Nears Resolution

07 September 2004

After five long years, an antitrust settlement between the European Union and Coca-Cola appears to be nearing completion.

EU regulators have circulated a draft agreement to the drink giant's top-five rivals and purchasers in each EU member state.

The proposals aim for a fairer deal for Coca-Cola's competitors by curtailing some of its market power and promoting more consumer choice.

They suggest the sharing of up to 20% of cooler space with rivals like PepsiCo and the cessation of retailer incentives to achieve particular sales levels.

The other soft-drink retailers and suppliers now have two weeks to comment on the deal, which also states that Coca-Cola will end the practice of giving discounts to retailers in exchange for their purchase of additional products, and stop the exclusive sale of its goods during sponsored events.

Aside from the changes to sales and distribution practices, Coca-Cola has been granted concession by the EU to continue bulk purchase discount offers and maintain its exclusive rights to branded drink dispensers.

The Atlanta-based beverage behemoth holds about half of all market share in Europe, while PepsiCo has less than 10%. The antitrust probe began in the late 1990s after PepsiCo complained to the EU about Coca-Cola's marketing practices in the UK, Austria, Belgium, Denmark and Germany.

If the proposals are deemed acceptable, Coca-Cola will avoid a hefty antitrust abuse fine and further EU interceptions in its sales practices.

European Coca-Cola chairman Jonathan Chandler believes the company has addressed all the EU concerns, a sentiment seemingly echoed by EU antitrust spokesman Tilman Lueder: "The draft engagement is promising and we are testing market reactions."

But it remains to be seen whether the proposals will find favor with PepsiCo. Spokesman Dick Detwiler cautioned that "the real test of any settlement will be whether it results in adherence to lawful marketplace practices."

Data sourced from: The Wall Street Journal Online; additional content by WARC staff