Coca Cola Israel handed NIS 62.7m antitrust fine

Coca Cola Photo: Reuters

The Central Bottling Company allegedly offered discounts on monopoly Coca Cola products to customers that bought Tara dairy products.

Israel Antitrust Authority head Adv. Michal Halperin yesterday handed the Central Bottling Company Group, which manufactures Coca Cola in Israel, fines totaling NIS 62.7 million, for exploiting its monopoly status in the country's soft drinks market.

The Israel Antitrust Authority also informed the Central Bottling Co. that it had apparently violated instructions it had been given and signed on when it merged with mineral water producer Neviot. The Israel Antitrust Authority also fined a senior executive at the company NIS 340,000 for his alleged involvement or at the very least being aware of the orders that were signed on by the company. The charges and fines are subject to a hearing.

Owned by the heirs of the late Moshe Wertheim, the Central Bottling Co. (Coca Cola Israel) is a major player in Israel's beverage market with the Coca Cola and related soft drink brands like Kinley, Fanta and Sprite as well as full ownership of the Tara dairy, Neviot mineral waters, Prigat fresh juices and the license to brew the Tuborg, Carlsberg, Stella Artois, Guinness and other beer brands in Israel. The company also has operations in Romania.

The company allegedly offered discounts on its monopoly soft drink products like Coca Cola to retail chains, institutional customers and cafes prepared to buy Tara dairy products. At the same time, the company allegedly threatened institutional customers that if they did not buy Tara dairy products, they would not receive discounts on Coca Cola products. Such cross-marketing involving a monopoly product is a criminal offense. Since 2014, a range of the company's senior executives have been questioned on the matter.

The company is also charged with violations in the battle between its FUZE cold tea beverage and its rival brand Nestea. In the switchover from its Nestea brand, which the company stopped producing with Tempo due to take over the brand, The Israel Antitrust Authority claims the company violated an agreement with Tempo by introducing FUZE two months earlier than planned and stopping production of Nestea. Thus the Central Bottling Co gained a competitive advantage with Nestea off the shelves for two months.

The Central Bottling Co. said in response, "In contradiction to the announcement by the Antitrust Authority, the Central Bottling Co. does not demand exclusivity on its products from businesses, and does not link monopoly products with other products, and did not work to block personal imports."

"The company did not work to clear the Nestea production facilities or illegally regarding refrigerators at businesses. The opposite is true. The declared policy of the company is to comply with all legal instructions in a concrete way and strictly observe antitrust instructions and the instructions given to the company by the Authority over the years. It is not clear on what basis the Authority intends setting the far-reaching decisions it has announced, which have no basis. The facts will be presented as part of the hearing to which the company has been summoned and we believe that at the end of the procedure it will be clear that the company worked appropriately and according to the law."

Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Coca Cola Photo: Reuters
Coca Cola Photo: Reuters
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