Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/A.39.116/B2 — Coca-Cola(Text with EEA relevance)
Date: 2004-11-26
Institutions: European Commission
Subjects: Iceland, Norway, beverage industry, distributive trades, dominant position, exclusive distribution agreement

C 289/10

EN

Official Journal of the European Union

26.11.2004

Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case
COMP/A.39.116/B2 — Coca-Cola

(2004/C 289/08)

(Text with EEA relevance)

1. Introduction

(1) The European Commission has received a set of commit-
ments formally endorsed by ‘The Coca-Cola Company’
(TCCC) and its three most important bottlers in the EEA,
‘Coca-Cola Hellenic Bottling Company’,
‘Coca-Cola Enter-
prises’ and ‘Coca-Cola Erfrischungsgetränke AG’, together
‘the Companies’. These commitments have been made in
the course of a Commission investigation into the Compa-
nies' business practices across the European Community,
Norway and Iceland in the context of Article 82 of the EC
Treaty and Article 54 of the EEA Agreement.

(2) By means of

the present publication,

the Commission
intends to market test the Companies' current proposal for
commitments, which purport to address the Commission's
competition concerns expressed in its preliminary assess-
ment with regard to the investigated practices of
the
Companies. Subject to the outcome of the present market
test, the Commission intends to adopt a decision pursuant
to Article 9(1) of Council Regulation (EC) No 1/2003 of 16
December 2002 on the implementation of the rules on
competition laid down in Articles 81 and 82 of
the
Treaty (1), to make those proposed commitments which
meet the concerns expressed by the Commission in its
preliminary assessment binding on the Companies. Such a
decision would not conclude whether or not there has been
or still is an infringement.

for colas and non-colas,

(5) The practices raising concerns relate, with respect to both
distribution channels, to exclusivity requirements, rebates
granted on condition that the clients reach, on a quarterly
basis, individually specified purchase thresholds separately
tying arrangements and
set
arrangements requiring the clients to carry for sale a range
of cola stock-keeping units (SKUs) and/or non-cola SKUs.
In the take-home channel, the Companies apply shelf space
arrangements whereby the supermarkets reserve a large
part of their CSD shelf space for TCCC-branded products.
In the on-premises channel, customers receive up-front
financing conditional upon their purchase of TCCC-
branded products over a number of years. Moreover, the
Companies have also attached certain exclusivity-related
restrictions to the installation of technical sales equipments
such as beverage coolers, fountain dispensers or vending
machines.

(6) According to the preliminary assessment, all practices have
made access to the outlets more difficult for competitors to
the ultimate detriment of consumers. The preliminary
assessment noted in particular that the Companies could
use the market power of their strong brands and the wide
product portfolio as leverage to maintain and expand their
market position.

3. Commitments

2. Preliminary assessment

(3) The Commission has informed the Companies by letter of
18 October 2004 of its preliminary assessment within the
meaning of Article 9(1) of Regulation (EC) No 1/2003.

(4) Pursuant

to the preliminary assessment, TCCC and its
respective bottlers jointly hold a dominant position in
certain of the national markets for the supply of carbonated
soft drinks (CSDs) in the EC, Norway and Iceland and this
in at least one of the two distribution channels: the take-
home channel (supermarkets and other retail outlets), and
the on-premises channel, also known as the away-from-
home, horeca (catering) or gastronomy channel (2).

(1) OJ L 1, 4.1.2003, p. 1.
(2) Based on the data currently available (data for Cyprus, Luxembourg
and Malta not yet available), the commitments would be applicable
to: Austria, Belgium, Denmark, Estonia, France, Germany, Greece,
Italy, Latvia, Lithuania (only
Hungary (only take-home channel),
take-home channel),
the Netherlands, Norway (only take-home
channel), Poland (only take-home channel), Spain, Sweden and the
United Kingdom.

(7) The commitments are briefly summarised in what follows
and published in full in a non-confidential English version
on the website of the Directorate-General for Competi-
tion:

http://europa.eu.int/comm/competition/antitrust/cases/
decisions/39116/tccc_final_undertaking_041019.pdf

(8) The Companies propose to apply the commitments in all
Member States, Norway and Iceland insofar as TCCC-
branded CSDs accounted, in the previous year, for more
than 40 %, and more than twice the share of the nearest
competitor, of national CSD sales in either the take-home
channel or the on-premises channel.

(9) With respect to both distribution channels, the Companies

commit:

— not

to impose any exclusivity provisions on their

customers,

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Official Journal of the European Union

C 289/11

— not

to offer any target rebates for TCCC-branded
CSDs, that is to say any rebates or other advantages in
exchange for a customer's reaching individually speci-
fied purchase thresholds,

— not to impose any tying arrangements making the
supply of any TCCC-branded cola CSD or TCCC-
branded orange CSD conditional on the purchase of
one or more additional TCCC-branded beverages,

— to define any assortment and range arrangements
separately for TCCC-branded regular
cola CSDs,
TCCC-branded light cola CSDs and TCCC-branded
orange CSDs. Whenever the commitments indicate the
separate treatment of TCCC-branded orange CSDs, this
only applies in countries where 'Fanta Orange Regular'
accounted, in the previous year, for more than twice
the share of the nearest competing brand of orange-
flavoured CSDs in either the take-home channel or the
on-premises channel,

— not to make the supply of any TCCC-branded CSDs or
the extent of any advantage conditional on the
customer discontinuing, reducing or varying the rela-
tionship with any other supplier.

(10) Specifically with respect to the take-home channel, the

Companies commit:

— to define any arrangements reserving a proportion or
shelf
amount of permanent
'shelf space
space in customers' outlets (hereafter:
arrangements')
for TCCC-branded cola
separately
CSDs, TCCC-branded orange CSDs and any other
TCCC-branded CSDs,

ambient-temperature

— in any shelf space arrangements, not to reserve a share
of permanent ambient-temperature CSD shelf space
for TCCC-branded cola CSDs which would exceed the
national share of CSD sales accounted for by TCCC-
branded cola CSDs in the previous year minus 5 % of
that share,

— in any shelf space arrangements, not to reserve a share
of permanent ambient-temperature CSD shelf space
for TCCC-branded orange CSDs which would exceed
the national share of CSD sales accounted for by
TCCC-branded orange CSDs in the previous year.

(11) Specifically with respect to the on-premises channel, the

Companies commit:

— to limit the duration of any financing agreements to a
maximum of five years while giving customers the
to repay any
option, at
proportion of the loan payments due in cash or (b) to
terminate the agreement without an early repayment
penalty. Moreover, any such agreements will not be

three months' notice,

(a)

conditioned on the purchase of a specified range of
TCCC-branded CSDs,

— to limit the duration of any availability agreements to
a maximum of five years while giving customers, for
the first time after three years, the annual option to
terminate the agreement without penalty,

— when sponsoring venues (for example sports stadia or
theme parks), to require exclusivity in the venue only
in respect to the sponsoring brands or flavour cate-
gories. When sponsoring events (e.g. sporting events,
festivals), the Companies may impose exclusive CSD
supply rights for the full range of the Companies'
CSDs.

(12) Specifically with respect to commercial agreements in the
on-premises channel entered into following competitive
tendering, the Companies may impose exclusive beverage
supply. When the tender is organised by large, private
sector customers, the agreements will have a maximum
duration of five years while giving customers, for the first
time after three years, the annual option to terminate the
agreement without penalty. The Companies will also limit
the sales volume of tender agreements entered into with
private customers that contain exclusive CSD supply
rights to 5 % of the Companies' annual CSD sales in the
on-premises channel.

(13) Specifically with respect to the placement of technical

sales equipment, the Companies commit:

— in the case of beverage coolers, to apply the following
conditions: Firstly, where the cooler is provided free
on loan, the Companies may impose cooler exclusivity
unless no other installed chilled beverage capacity to
which the consumer has direct access is available in
the outlet in which case the customer may use at least
20 % of the beverage cooler for any products of his or
her choosing. Secondly, where a customer rents a
cooler, he or she may, in any event, use at least 20 %
of the beverage cooler for any products of his or her
choosing. Thirdly, where a customer purchases a
cooler, he or she is entirely free to decide how to
stock it,

— in the case of fountain dispensers, to leave customers
the freedom to place competing fountain dispensers,
while limiting the maximum duration of any purchase
commitment
sold through fountain
dispensers to no more than three years, with an
option for the customer to terminate the purchase
commitment at any time following a term not
exceeding two years,

for products

— in the case of vending machines, to leave customers
the freedom to place competing vending machines.

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Official Journal of the European Union

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4. The Commission's intention

(14) The Commission intends, subject to the outcome of this
market test, to adopt a decision under Article 9(1) of
Regulation (EC) No 1/2003 declaring those proposed
commitments which meet the concerns expressed by the
Commission in its preliminary assessment to be binding
on the Companies. To this end, it invites interested third
parties to submit their comments to it within one month
of the publication of this notice.

(15) Interested third parties are also asked to submit a non-
confidential version of their comments, in which business

secrets and other confidential passages are deleted and are
if necessary replaced by a non-confidential summary or
by the words ‘[business secrets]’ or ‘[confidential]’.

(16) Comments should be sent

to the following address,
mentioning the reference ‘COMP/A.39.116/B2 — Coca-
Cola’:

European Commission
Directorate-General for Competition
Antitrust Registry
B-1049 Brussels
Fax: (32-2) 295 01 28.