Coca-Cola and Commission Reach Agreement: The 2004 Settlement in Detail
In 2004, American-based Coca-Cola reached an agreement with the European Commission over business conduct spanning the European continent. The settlement followed an intensive five-year anti-trust investigation, provoked by complaints from Coca-Cola’s chief rival, Pepsi, into alleged anti-trust commercial behavior. The settlement was drafted in consultation with competitors.
The settlement stands as a landmark as one of the first cases in which the Commission opted to negotiate an agreement in lieu of lavish financial penalties. The accord between the European Commission and Coca-Cola, which operates in all EU countries, shut down two similar anti-trust investigations in France and Spain.
Coca-Cola is alleged to have undermined competition by requiring retailers to sign exclusivity agreements that forbid the latter from selling products by rivals such as Pepsi. Coca-Cola is also alleged to have abused its dominant market share by offering “rebates” for retailers that carried the whole Coca-Cola line of products, and providing retailers with additional rebates for adherence to purchasing agreements.
At the time of the settlement, Coca-Cola dominated approximately half of the European market with some £17 billion in annual sales. Its dominance was especially striking in Belgium, where it controlled 68 percent of the market compared to Pepsi’s 5 percent. Other European markets were nearly as striking, such as France, where Coke held 60 percent of the carbonated beverage market and Pepsi boasted just 5 percent.
The settlement heralded an end to exclusivity contracts and anti-competitive rebate programs. Retailers were empowered to use up to 20 percent of Coca-Cola refrigerators to stock products from rivals instead of less popular products in the Coca-Cola name. And, retailers were no longer forced to group all Coca-Cola products together.
Although the European Commission preferred to find an agreeable settlement in consultation with Coca-Cola and its competitors rather than levy fines against the company, the Commission may impose financial penalties if Coca-Cola is found to have violated any of the key settlement provisions.
The Commission believes that the settlement has resulted in greater choice for consumers and genuine competition in the European market. The Commission’s chief regulator, Mario Monti, said of the settlement that consumers would be enabled to purchase drinks “on the basis of price and personal preferences, rather than pick up a Coca-Cola product because it’s the only one on offer.”
The settlement marked the end of what was then the Commission’s longest-running anti-trust investigation. The agreement is binding in all European Union countries.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
The settlement stands as a landmark as one of the first cases in which the Commission opted to negotiate an agreement in lieu of lavish financial penalties. The accord between the European Commission and Coca-Cola, which operates in all EU countries, shut down two similar anti-trust investigations in France and Spain.
Coca-Cola is alleged to have undermined competition by requiring retailers to sign exclusivity agreements that forbid the latter from selling products by rivals such as Pepsi. Coca-Cola is also alleged to have abused its dominant market share by offering “rebates” for retailers that carried the whole Coca-Cola line of products, and providing retailers with additional rebates for adherence to purchasing agreements.
At the time of the settlement, Coca-Cola dominated approximately half of the European market with some £17 billion in annual sales. Its dominance was especially striking in Belgium, where it controlled 68 percent of the market compared to Pepsi’s 5 percent. Other European markets were nearly as striking, such as France, where Coke held 60 percent of the carbonated beverage market and Pepsi boasted just 5 percent.
The settlement heralded an end to exclusivity contracts and anti-competitive rebate programs. Retailers were empowered to use up to 20 percent of Coca-Cola refrigerators to stock products from rivals instead of less popular products in the Coca-Cola name. And, retailers were no longer forced to group all Coca-Cola products together.
Although the European Commission preferred to find an agreeable settlement in consultation with Coca-Cola and its competitors rather than levy fines against the company, the Commission may impose financial penalties if Coca-Cola is found to have violated any of the key settlement provisions.
The Commission believes that the settlement has resulted in greater choice for consumers and genuine competition in the European market. The Commission’s chief regulator, Mario Monti, said of the settlement that consumers would be enabled to purchase drinks “on the basis of price and personal preferences, rather than pick up a Coca-Cola product because it’s the only one on offer.”
The settlement marked the end of what was then the Commission’s longest-running anti-trust investigation. The agreement is binding in all European Union countries.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: coca-cola, eu competition law, eu law, european antitrust lawsuits, fines
posted by European Antitrust Law at
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