Zambezi Times Online 2004

Copperbelt Retailers Question Soft Drinks Franchise

LUSAKA, May 3 - Soft drinks retailers on the Copperbelt have questioned the franchise between Coca-Cola company and Zambia Bottlers which has distorted market prices and constrained distribution of the 500 ml plastic bottled soft drinks.

The franchise gives Zambia Bottlers an exclusive right to distribute Coca-Cola, Fanta and Sprite products which were produced by Invesco which holds another franchise with Coca-Cola company to produce 500 ml carbonated drinks in disposable containers.

Zambia Competition Commission (ZCC) executive director George Lipimile confirmed receiving the complaint from the traders in October last year.

Mr Lipimile said the traders were alleging that the 500 ml plastic bottled drinks produced by Invesco Limited were costing more than the one litre glass bottled drinks produced by Zambia Bottlers.

They further alleged that Zambia Bottlers had over the same time increased prices of the 500 ml plastic bottled drinks by 17.9 per cent yet Invesco Limited, which produced the drinks had not effected an increase.

Mr Lipimile said preliminary investigation by the ZCC revealed that Zambia Bottlers had become the exclusive distributor of Invesco products following a Supplementary Agreement between Coca-Cola and Invesco which compelled Invesco to sell the 500 ml products to Zambia Bottlers.

He said out of this agreement, ZCC detected likely anti-competitive conduct by Zambia Bottlers aimed at eliminating the 500 ml drinks from Invesco Limited and promote their newly introduced one litre glass bottled drinks.

"The Supplementary Agreement was not notified with the commission in accordance with the law and hence not authorised by the ZCC," Mr Lipimile said.

He said during the takeover of Cadbury Schweppes brands by Zambia Bottlers and the subsequent takeovers of Zambia Bottlers and Copperbelt Bottling company by Zambian Breweries, the ZCC considered and determined to ensure that there were at least two viable competitors in the carbonated soft drinks market in Zambia.

The competitive situation was now under threats due to the effect of the Supplementary Agreement between Coca-Cola and Invesco which gave Zambia Bottlers an exclusive distribution right.

He said the arrangement had caused price distortions that have also raised competition concerns and loss in consumer as the inclusion of Zambian Bottlers in the distribution chain increases the cost of the Invesco products.

The price distortion had resulted in the one litre glass bottled Coca-Cola being cheaper that the 500 ml plastic bottled by at least K50.

Mr Lipimile said the ZCC had commenced dialogue with the parties involved to come up with a solution as it had become apparent that the Supplementary Agreement in its current form could be inimical to competition.

The matter would be determined at the forth coming board meeting next month.

By Business Reporter
Source: The Times of Zambia / allAfrica Global Media

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