East Africa Bottling Company, Ambo Water get favourable verdict over disputed merger allegations

ETHIOPIA – The Federal Supreme Court of Ethiopia has finally given the verdict on the case by the Trade Competition & Consumer Protection Authority (TCCPA) against East Africa Bottling Company, bottlers of Coca-Cola and Ambo Mineral Water over an alleged illegal merger.

The case, dating 16 June 2017 implicated that the two companies, Ambo Mineral Water and East African Bottling Company had engaged in an illegal merger without proper notification to the authority.

According to reports by Addis Fortune, Justices at the Supreme Court`s Cassation Bench ruled that there is no legal basis for the TCCPA to challenge the merger between the two beverage manufacturing companies.

The federal consumer protection agency sued the two companies on basis that the Ambo Mineral Water and East African Bottling merger in January 2017, in the presence of their staff and distributors at an event held at the United Nations Economic Commission for Africa (UNECA).

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Trade Competition & Consumer Protection Authority claimed the merger happened through the meeting of minds

The Authority claimed that the merger was evidenced by the companies’ management agreeing that distributors would carry both their products by deploying the same sales system; the transfer of major administrative employees between the companies; and shared advertisements, logos and letters.

Prosecutors from the Authority presented this as material evidence to prove a merger they challenged as illegal. They argued a merger could be validated in written form, conduct or through what they term as the meeting of minds.

It was an assertion the accused contested, claiming that there was no merger between the domestic companies. If there was, it was made between their parent companies.

First established in the 1930s as a private company, Ambo Water was nationalized during the Dergue regime. In 2008, it was partially privatized with stakes being sold to South African brewery SABMiller and Tewodros Ashenafi, a businessman with a background in oil exploration in Ethiopia.

At the time, SABMiller owned 51% of the company, while Tewodros owned 16%.

Later the government sold its remaining 33% stake to Ambo International Holdings Ltd, registered in Mauritius, for US$19.7 million.

In 2014, the merger between SABMiller Plc, The Coca-Cola Company and SABCO is claimed to have swallowed Ambo International Holding Mauritius and East African Bottling, to form Coca-Cola Beverages Africa (CCBA).

Having its jurisdiction over trade disputes, the Authority ruled in August 2017 that the companies were liable for merging without its acknowledgment and imposed a fine equal to 5% of sales revenues on both companies from the following operation year.

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In January 2018, lawyers representing the companies appealed the case urging the ruling to get reversed and for the fines to be lifted.

The appellate court remanded the case to the lower tribunal, which sustained its former ruling.

The corporate lawyers took the case to the Federal High Court in July 2019. Judges at the High Court overruled the decision in November 2019 in favor of the companies. The judges said they found no sufficient evidence to prove that the companies have merged.

It was the prosecutors from the Authority’s turn to challenge the ruling in their appeal filed before the Supreme Court a year later, whose ruling has been recently finalized with the Supreme Court Judges pronouncing that the lower court had made no basic legal error in their review.

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