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Last Updated: Wednesday, 22 June, 2005, 13:30 GMT 14:30 UK
EU makes Coke throw open fridges
Girl drinking a Coke
Coca-Cola has been accused of stifling competition in Europe
Coca-Cola has formally agreed to change its sales practices in Europe after an EU investigation found that its business methods stifled competition.

Agreements with shops and bars to stock Coke drinks exclusively will now end as will its practice of giving stores rebates for hitting sales targets.

The European Commission said the legally binding agreement would give consumers more choice of fizzy drinks.

The deal, first outlined in October, followed a six-year competition probe.

Coke has about a 50% share of the European soft drinks market.

Shelf space

The European Commission found that Coke, the world's largest producer of carbonated drinks, had used its corporate muscle to stifle competition through a series of sales agreements.

Consumers will be able to choose from a wider range of fizzy drinks at competitive prices
Neelie Kroes, EU competition commissioner

These required shops and bars selling Coke to also stock less popular brands such as Sprite and Vanilla Coke.

Coke has avoided a fine but is being forced to overhaul its business methods in all of Europe's leading soft drinks markets.

In future, where Coke supplies a free-branded fridge to retailers with no other means of cooling drinks, 20% of its shelf space must be given over to products from other companies.

Dominant position

The agreement, which covers 27 European countries, will be legally binding until at least 2010.

WHERE THE RULES WILL APPLY
Bottles of Coke and Diet Coke
Austria
Belgium
Denmark
Estonia
France
Germany
Greece
Italy
Latvia
Lithuania
Luxembourg
Netherlands
Spain
Sweden
United Kingdom

It will initially apply in 15 countries - including France, Germany and the UK - where Coke is most dominant in terms of market share.

However, the agreement will be extended to other countries if Coke's share of sales in key distribution channels exceeds 40% of total sales or becomes double that of its nearest competitor.

The European Commission said the outcome of its lengthy battle with Coke was a victory for consumers.

"This decision will benefit will benefit consumers by improving competition in the markets for carbonated soft drinks in Europe," said EU Competition Commissioner Neelie Kroes.

"Consumers will be able to choose from a larger range of fizzy drinks at competitive prices."

Playing by the rules

Coke faces potential fines of up to 10% of annual turnover if it fails to comply with the requirements of the ruling.

The company said it welcomed the fact that the ruling had made its obligations crystal clear.

It stressed that it had changed most of the practices in question some months ago following October's outline agreement and that the immediate impact on its business would be slight.

"It is all about the consumers wanting what we provide and if consumers want our brands then retailers will stock them," a Coke spokesman told the BBC.

"If we do that, we will play by the rules and be successful."





SEE ALSO:
Coca-Cola probe brought to an end
18 Apr 05 |  Business
EU open to deal in Coca-Cola row
01 Jun 04 |  Business
Coke opens fridge door to rivals
19 Oct 04 |  Business


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