EU binds Coca-cola commitments on consumer choice

The European Commission, the executive arm of the European Union (EU), on Wednesday legally binds commitments made by US-based soft drinks giant Coca-Cola aimed at increasing consumer choice.

The decision, following nearly nine months of testing of Coca-Cola's proposals, made in response to a long-running investigation of the company's business practices which were found to restrict competition.

The Commission first began investigating Coca-Cola in 1999 following a complaint by rival PepsiCo that its products were effectively being kept off the shelves and out of coolers by Coke's policy of offering retailers rebates and bonuses.

Coca-Cola responded to the claims by proposing a number of measures that were put to market test by the Commission back in October 2004. Following the successful conclusion of these tests, and further consultation with industry players, the Commission has made them legally binding, obliging Coca-Cola to follow them until December 31, 2010 or face fines of up to 10 percent of its global turnover.

From now on, Coca-Cola will be banned from making exclusive distribution agreements with any of its customers - a practice that was widespread prior to the Commission's investigation.

The Atlanta-based company will also stop offering rebates to customers for maintaining or increasing their order of Coke products - seen by the Commission as an incentive to stock more Coca-Cola brands to the detriment of rival drinks.

Source: Xinhua