KENYA – Diageo’s units in Kenya, Kenya Breweries Ltd, and UDV (Kenya) have been barred from terminating exclusive beer distributorship agreements with the two firms, Ngong Matonyok Wholesalers Ltd and Manara Ltd.
The two distributors filed a case in March claiming that KBL and UDV were on the verge of terminating or suspending their distribution agreements, which they entered in April 2019 and January 2022, respectively.
The firms argued that the termination would have the ‘domino effect’ of triggering breaches of countless contracts between them and third parties, subject to multi-billion investments that enable the distributors to carry out the service.
Mr. Joseph William Nduva Muli of Ngong Matonyok Wholesalers Ltd said he had been a distributor of the beer makers for 55 years and his firm has exclusive rights to distribute the products in Kiserian, Ngong, Wangige, Magadi, and Dagoretti regions.
On the other hand, Manara Ltd, which has been a distributor for seven years, has been licensed to operate in Kitengela, Kajiado, Athi River, Machakos, Bissil, Namanga, and Maili Tisa.
Bia Tosha, one of the largest beer distributors in Kenya, and which the Supreme Court ruled in favor of by directing EABL to reinstate the distributor to the contested routes, joined the case to persuade the court to find the two distributors at fault.
In an affidavit, the managing director of Bia Tosha, Ms. Anne Marie Burugu, said the two firms did not mention the Supreme Court judgment and were guilty of concealment of material facts.
The High Court, however, went contrary to the plea of Kenya Breweries Ltd, UDV (Kenya) Ltd, and Bia Tosha to uphold the distributorship deal, explaining that the order was made to maintain the status quo.
After being satisfied with the documents placed before it, the court called for the preservation of the distributorship deal, pending the determination of the case.
“Since I have found that there was no material non-disclosure, the application to discharge the orders on that basis fails,” the judge said and directed Bia Tosha to respond to the main case, filed by the rival distributors.
In addition, the court was satisfied with the urgency of the application and the financial implication that would arise from the termination and the prevailing hard economic times.