COMESA agency pushes for restructure in Coca-Cola’s pricing model

AFRICA – The Common Market for Eastern and Southern Africa (COMESA) Competition Commission (CCC) has called for suspension of the clause that allows Coca-Cola Beverages Africa Ltd (CCBA) to set prices for its distributors.

According to CCC, stipulation of price by CCBA, a subsidiary of the Atlanta based Coca-Cola Company, on its non-alcoholic drinks has had a tendency of subjecting consumers to higher prices, reports Business Daily.

“The stipulation of prices by a market leader was likely to lead to an inflation of prices of competing brands in the market where the incumbents set prices in a similar fashion as that of the market leader.

The overall effect of this would be higher prices for consumers,” says CCC.

COMESA said that the soft beverage producer undertook to amend its agreements to remove clauses that stipulate the prices and profit margins for its products.

“Furthermore, the CCBA undertook to implement a compliance programme designed to ensure that its employees, management and directors do not engage in conduct that contravenes the regulations,” CCC notes.

The agency said that the move as aimed at promoting fair competition among entities in the sector.

In January 2018, CCC launched investigations on the distribution agreements between CCBA and third-party distributors, which contained clauses stipulating the resale price at which various non-alcoholic beverages under trademarks of The Coca-Cola Company were to be sold.

“The objective of the investigation was to determine whether the resale price maintenance clauses in the agreements were violating the Regulations.

The Commission noted that CCBA’s pricing behaviour was not effectively constrained by that of its competitors,” CCC said in a statement.

CCC is charged with the responsibility of checking against anti-competitive practices as well as overseeing mergers and acquisitions in the continent.

The commission revealed that among the transactions it has approved was the acquisition of Monsanto Company by Bayer, that took place last year.

Bayer and St Louis-based Monsanto are multinational agricultural companies and currently compete to sell farmers seed and crop protection products.

CCBA is the biggest Coca-Cola bottler in Africa and the seventh largest in the world accounting for accounts for around 40% of all Coca-Cola beverage volumes on the Continent and employs over 15 000 employees.

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