Coca-Cola has avoided a fine of up to Sh10 million or cancellation of its Sh10.7 billion acquisition of stakes in three soda bottling firms from Centum Investment for 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 soda giant, had stopped retailers from stocking drinks from rival firms in its branded fridges.
Howwever, Coca-Cola had breached an agreement attached to the approval of the Sh10.7 billion deal in 2019 that it would allow rival firms to use its coolers ahead of September 2021.
“The authority directed CCBA to amend the cooler agreements and provide evidence of the execution by distributors,” says CAK in its latest annual report for the year to June last year.
Additionally, after the June reporting period, Coca-Cola complied with the order, sparing the company from regulation action, the CAK reported to the Business Daily on Tuesday. The CAK may revoke an approved acquisition or impose fines on businesses or people for violating the terms of a transaction’s approval under Section 26 of the Competition Act of 2016.
“Any person who, being a party to a merger — fails to comply with any condition attached to the approval for the merger — commits an offence and shall be liable on conviction to a fine not exceeding Sh10 million or to imprisonment for a term not exceeding five years, or to both,” says the Act.
Additionally, the CAK had in 2019 approved a transaction with six conditions that saw Coca-Cola Sabco East Africa buy a 53.95 percent stake in Almasi Beverages from Centum.
Nonetheless, one of them required Coca-Cola to allow small and medium-sized businesses (SMEs) to stock brands from competing companies in the lower deck or at least 20% of the storage area of its cooling refrigerators.
Three bottling companies controlled by Almasi Beverages, Mount Kenya Bottlers, Kisii Bottlers, and Rift Valley Bottlers, provided Coca-Cola soda brands to areas of Central Kenya, Nyanza, and the Rift Valley.
Small retailers, according to the CAK, required protection because they had limited space and couldn’t afford to buy coolers from Coca-Cola’s rivals.