The European Union reached a settlement on Tuesday of its long-running antitrust case against the Coca-Cola Company, under which the world’s biggest soft-drinks company agreed to change sales practices that helped it win roughly half of the market in Europe.
EU Competition Commissioner Mario Monti said commitments presented personally by Coca-Cola chief executive Neville Isdell in Brussels were ”sufficient for a settlement decision, which will close a five-year probe”.
The changes include an end to exclusivity arrangements with stores or restaurants and allowing rival drinks into Coke-branded coolers, Monti said. The aim is to let consumers to choose what to buy ”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 deal allows Coke to avoid a fine and potentially years of continued legal wrangling. It will likely take effect next spring, after being translated and published in the EU’s official journal for a consultation period.
The so-called settlement decision, a new tool in the EU’s antitrust arsenal, makes the commitments to which the company agrees legally binding and enforceable in national courts. A fine could be imposed later if Coke breaches the terms.
The case was sparked by a complaint from PepsiCo in the 1990s that Coke’s distribution deals in Europe unfairly restricted access for competing products to store shelves and coolers.
Coke has roughly half the European market, compared with about 10% for Pepsi. In the United States, Coke’s lead over Pepsi is smaller.
Under the deal, Coke will scrap all rebates that require retailers to buy the same amount of Coke products or more each time. It also will no longer require that a customer who wants to buy bestselling regular Coke or Fanta Orange also take less-popular brands, or offer rebates if they do or reserve shelf space for them.
It also will allow rivals to occupy 20% of the space inside its coolers, if its coolers are the only ones in the store.
Monti, who was keen to close the case before his five-year term expires this month, received an offer from Atlanta, Georgia-based Coke last August, and last month was testing the market’s reaction — one of the final steps in settlement negotiations.
Talks broke down last spring between EU regulators and another US titan, Microsoft Corporation. The EU then fined Microsoft a record €497-million and drew up a list of demands that the software giant is now fighting in court.
In the Coke case, Monti is using a new legal tool that came into effect with new antitrust regulations in May.
So-called settlement decisions give his office the power to accept a settlement and make it legally binding, enabling Coke’s main rivals, including the New York-based Pepsi, to sue for any violations in national courts.
After the draft compromise is published in the EU’s official journal, there is a one-month period for comments from Coke’s competitors or other interested parties. The comments will then be reviewed by the commission.
Little change is expected, as regulators had already sought industry input beforehand and publishing the text signals they believe the deal is satisfactory. — Sapa-AP