Coca-Cola has avoided a fine of up to Sh10 million or the cancellation of its Sh10.7 billion purchase of stakes in three soda bottling companies from Centum Investment, despite breaching a regulatory condition linked to the deal’s approval.
The Competition Authority of Kenya (CAK) found that Coca-Cola Sabco East Africa had prevented retailers from stocking rival firms’ drinks in its branded refrigerators, which violated an agreement linked to the approval of the acquisition.
The CAK warned Coca-Cola Sabco East Africa to comply with the agreement by September 2021 or face punishment.
“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.
The CAK revealed in its latest annual report that Coca-Cola had complied with the order after the June reporting period.
The CAK permitted Coca-Cola Sabco East Africa to acquire a 53.95 per cent stake in Almasi Beverages from Centum in 2019, subject to six conditions.
“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.
These included Coca-Cola setting aside at least 20 per cent of the storage space in its cooling refrigerators for small and medium-sized enterprises to stock rival brands.
The other two conditions of the acquisition required Coca-Cola to retain all of Almasi’s permanent employees and operate its five plants for at least three years after the deal’s completion.
