Coca-Cola Hits Back in Sales and Marketing Probe

19 December 2000

Coca-Cola de Mexico, whose sales and marketing practices are currently under investigation by the nation’s Federal Competition Commission (CFC), has applied to court for an injunction to protect its interests.

According to Coke spoke Rodrigo Calderon, these include a number of exclusivity contracts at mainstream entertainment and sporting events – so called ‘image contracts’ – which, under the fuzzy rules of the probe, Coke cannot renew; nor can it enter into any new deals until the investigation is resolved.

Explains Calderon: "The official notification of the investigation [in November] was accompanied by a preventive measure, which is separate, and that's the one we have sought an injunction against." Coca-Cola de Mexico has already defended its commercial practices to the CFC.

The investigation was triggered after complaints of monopolistic practices lodged by PepsiCo and two Mexican beverage rivals charging Coke with monopolistic practices, specifically in the small retailer market sector. Coke is concerned that the generalised nature of the CFC prohibition could include its ‘image contracts’.

Although conceding that Coke offers “incentives” to small retailers, Calderon attacked the investigation, dubbing the charges of monopolistic practices as "totally unsubstantiated". As to the volume discounts, store decoration, and basic accounting and marketing training offered to around half of Coke’s 900,000 Mexican sales outlets, he insists: "None of the incentives are conditioned to the exclusive sale of our product, it's just better marketing."

News source: Wall Street Journal