EU-Coke antitrust case still to be finalised

Competition spokesman Tilman Lueder told a news conference that "the company Coca-Cola has submitted a very good undertaking ... that addresses the concerns made by customers and competitors alike"​. But the matter, which has dragged on for five years, has still not been fully resolved.

The case, which centres around the display of Coke products at the expense of rival brands, is of major consequence to big manufacturers. Some believe that the ruling could be detrimental to their ability to build up brand awareness.

Certainly, the antitrust case highlights the way in which big manufacturers face growing constraints on their business practices. European antitrust principles are designed to promote competitors and choice, not just fair prices for consumers.

As the Washington Post pointed out yesterday, the EU's antitrust authorities are increasingly dictating how manufacturers package and present their products.

The EC has been looking into the legality of Coca-Cola's rebates to retailers since 1999, when it carried out an unannounced inspection at the group's European headquarters. In particular, the EC has been examining rebates for retailers that carry a range of Coca-Cola products and at rewards for displaying drinks prominently.

Coca-Cola has consistently claimed that its rebates are normal practice, and has argued that big retailers exercise more power over the sector. The soft drink giant denies that it dominates the market.

However, the case finally looks to be winding up, with Coke anxious to reach a deal. Last Friday the EU's executive branch sent the proposed settlement - which should make it easier for Coca-Cola competitors to get a toehold in the marketplace - to major retailers and competitors for their reaction.

Reuters reports that the EU is satisfied with what is on the table, but needs to listen to what customers and competitors have to say. This informal market test should last around two weeks, after which the Commission will invite other competitors and retailers for comment.

"It (the proposed settlement) is a basis for us to conduct a first round of so-called informal market tests ... this undertaking is not yet cast in stone and that is why we are consulting the market,"​ said Lueder.

In particular, Coca Cola has offered to stop giving rebates on the condition that merchants group its products together in so-called "red racks" which display ordinary Coke, special flavours of Coke such as vanilla and Coke's non-cola products.

According to Reuters, Coke has also offered to make space available in its branded coolers for so-called "guest drinks", although not for rival colas. These non-Coca-Cola products would be given 20 per cent of the cooler's capacity.

Rival PepsiCo, which has made many of the allegations, has consistently contended that it faces unfair barriers to competition in the market for cola drinks in Europe, where its market share is far smaller than in the United States. The company has complained that rivals have been shut out because shoppers are drawn to the Coke rack without bothering to look at rival offerings elsewhere in the store.

If accepted, the deal will be put into action by EU regulator keen to boost competition within the European soft-drinks market. Coca-Cola occupies close to 50 per cent of the market, while PepsiCo has less than 10 per cent.