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E.U., Coca-Cola Antitrust Case Over

Soft Drink Giant Agrees to End Exclusivity Sales Practices

By Paul Geitner
Associated Press
Wednesday, October 20, 2004; Page E03

BRUSSELS, Oct. 19 -- The European Union reached a settlement Tuesday of its long-running antitrust case against Coca-Cola Co. under which the world's biggest soft drink company agreed to change sales practices that helped it win roughly half the market in Europe.

E.U. Competition Commissioner Mario Monti said that commitments presented personally by Coca-Cola chief executive E. Neville Isdell in Brussels were "sufficient for a settlement decision, which will close a five-year probe."

Coca-Cola said it will make room for competitors on European store shelves. (Eckehard Schulz -- AP)

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The changes include an end to exclusivity arrangements with stores or restaurants, and allowing rival drinks into Coca-Cola refrigerators. The aim, Monti said, is to let consumers choose what to buy "on the basis of price and personal preferences, rather than pick up a Coca-Cola product because it's the only one on offer."

The deal allows Coca-Cola to avoid a fine and potentially years of continued legal wrangling. It would likely take effect in the spring, after being translated and published in the E.U.'s official journal for a formal consultation period.

In a statement, Isdell welcomed the deal, saying it "provides clarity" about how E.U. competition rules apply to sales practices of Coca-Cola and its European bottlers.

"We have always sought to compete fairly in an increasingly competitive European nonalcoholic beverage marketplace," he said.

PepsiCo Inc., whose complaint against Coca-Cola initially sparked the E.U. case, praised it as well. Spokesman Richard M. Detwiler Jr. said the deal should increase competition and result in "significant changes" in Europe's 17 billion euro ($21 billion U.S.) carbonated soft drink market.

The so-called settlement decision, a new tool in the E.U.'s antitrust arsenal, makes the commitments the company agrees to legally binding and enforceable in national courts. A fine could be imposed later if Coca-Cola breached the terms.

Pepsi complained in the 1990s that Coca-Cola's distribution deals in Europe unfairly restricted access for competing products to store shelves, coolers and soda fountains.

Coca-Cola, based in Atlanta, has roughly half the European market, compared with about 10 percent for Purchase, N.Y.-based PepsiCo Inc. In the United States, Coca-Cola's lead over PepsiCo is smaller.

Under the five-year deal, Coca-Cola will scrap all rebates that require retailers to buy the same amount of its products or more each time. It also will no longer require that a customer who wants to buy best-selling regular Coke or Fanta Orange also take less-popular brands, or offer rebates if they do or reserve shelf space for them.

It will also allow rivals to occupy 20 percent of the space inside its coolers, if its coolers are the only ones in the store.

After the draft compromise is published in the E.U.'s official journal, there is a one-month period for comments from Coca-Cola's competitors or other interested parties. The comments will then be reviewed by the commission.

Little change is expected, as regulators had already sought input from industry and national regulators beforehand.

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