Senate committee reignites debate over EABL, Keroche beer bottles war

By Lewis Njoka
Friday, November 20th, 2020
Beer. Photo/File
In summary

Lewis Njoka @LewisNjoka

Competition Authority of Kenya (CAK) halted investigations into the controversy surrounding the Euro beer bottle to allow a court case over the same matter to conclude.

Responding to a request by the Senate Standing Committee on Tourism Trade and Industrialisation sent on November 9 to shed light on whether East African Breweries Ltd (EABL) had a right to claim ownership of the Euro bottle.

The senate committee also sought to know whether the brewer was using its alleged dominant position in the market to engage in restrictive trade practices by engraving the bottle with its initials.

Since 2016, Keroche Breweries and EABL have been embroiled in an ownership tussle over the euro bottle sparked off by the latter embossing the bottle with its initials.

The tussle culminated in a court case which is yet to be determined.

“As such, before the conclusion of the investigations, it is speculative to say whether or not EABL’s conduct amounts to a contravention of the Act,” said CAK Director General, Wang’ombe Kariuki in the letter to the Senate.

In its preliminary findings, however, CAK, found that both Eabl and Keroche bought their brown bottles mostly from a producer called Consol glass with others imported from Tanzania and Egypt.

Best practice

It is international best practice to beer manufacturers to re-use bottles are in circulation except for those that are packaged differently according to the CAK.

But on the other hand, it is okay for a beer company to separate its bottles from those of competition by embossing them.

“Beer brands are widely considered as substitutes specifically on brands which have similar packaging designs.

As a result, a competing firm may decide to ring-fence their bottles from competitors by embossing them,” said Wang’ombe.

CAK was, however, not able to determine if Eabl’s embossing of the bottles with its initials amounted to abuse of dominance due to the pending court cases.

In the response, CAK said it had found Eabl culpable of engaging in restrictive trade practices in its distributorship agreements with distributors which granted them territorial and product exclusivity.

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