KENYA – Bia Tosha, one of the largest beer distributors in Kenya, wants the High court of Kenya to fine the Directors of East African Breweries Limited (EABL) an equivalent of 20 percent of EABL’s sales, or Sh39 billion (US$300.46m), for refusing to give it back beer distributorship routes in parts of Nairobi, Machakos, and Kajiado.
Anne-Marie Burugu, managing director of Bia Tosha, said the cases filed in the High Court by the distributors following the Supreme Court order are nearly similar, arguing that they are under the direction of EABL.
“The respondents have acted with reckless abandon and with total contempt for the authority of this court, have continued to infringe upon the applicant’s distribution areas,” she argues in documents filed in court cited by Business Daily Kenya.
“…That the respondents, upon conviction for the contempt, be condemned, individually and collectively, to pay a fine equivalent to 20 percent of their gross company turnovers as reflected in their respective 2021-2022 published accounts.”
Last month, the Apex court ruled in favor of Bia Tosha by directing EABL to reinstate the distributor to the contested routes.
The 22 routes are Namanga, Bissil, Kajiado, Kitengela, Athi River, Industrial Area, South B, and Nairobi West, Kenyatta, Langata, Rongai, Kiserian, Magadi, Upperhill, Ngong Road, Hurlingham, Kawangware, Satellite, Dagoretti, UDV A, UDV B, and UDV C.
Five judges of the court also referred the matter back to the High Court for the contempt hearing against EABL executives and to consider the consequences of any disobedience of the orders issued.
According to Ms. Burugu, EABL has continued to trade with third parties in disregard of the Supreme Court order. The disobedience, she argues, is deliberate and pre-determined.
“They ought to receive a severe reprimand in both monetary penalties and custodial sentences for its officers for the contempt,” Ms. Burugu noted.
A few days ago, EABL’s executives CEO Jane Karuku and Andrew Kilonzo, the managing director of Uganda Breweries Ltd, moved to the Supreme Court for a review of a decision that found them in contempt of court in a long-running battle with its former distributor.
The senior officials said the punishment of jailing them for six months, as sought by Bia Tosha, is radical and gross that should never be issued without hearing them.
The genesis of the partnership between the distributor and the brewer started in 1997 when they entered a distribution agreement for the latter’s products within some stipulated routes.
In the year 2000, through a letter dated July 20, 2000, Bia Tosha was offered new distribution areas on the condition that it would pay a non-refundable goodwill of Sh6,630,000 to Kenya Breweries.
In 2006, Bia Tosha’s territory grew to 22 routes after receiving rights to new routes. For the newly added territories, the distributor was asked to pay goodwill amounting to Sh31,668,000, to which it paid Sh27.3 million.
However, in the years that followed, EABL’s subsidiary, Kenya Breweries Limited, repossessed some territories including Baba Dogo, Dandora I and II, and Kariobangi North, from Bia Tosha to enable the brewer to serve the new areas.
Bia Tosha requested to be refunded the goodwill for the territories that were repossessed, but Kenya Breweries declined, indicating that the amounts were non-refundable, and further claimed that it was within their discretion to appoint other distributors as the agreement was non-exclusive.
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