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Coca Cola under investigation in Croatia over exclusive purchase agreements

Christian Fernsby |
The Competition Agency in Croatia (AZTN) has officially initiated a procedure for determining the conclusion of a prohibited agreement or abuse of dominant position in the sense of the provisions of the Competition Act (ZZTN) against Coca Cola HBC Hrvatska.

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The reason for initiating the procedure is the contracts concluded by Coca-Cola Croatia with its customers, which contain provisions aimed solely for the purchase of products from Coca-Cola Croatia.

The AZTN, in a special case study of the state of the non-alcoholic beverage distribution market in the HoReCa channel on the territory of the Republic of Croatia, inspected the business cooperation agreement concluded by Coca-Cola Croatia with one of the catering facilities it supplies.

With this contract, the buyer agrees that all his needs for fruit juices, ice tea, energy drinks and mineral waters will only be met by ordering the brands from the Coca-Cola range, and that they will always have a full range of Coca-Cola drinks and all its new products in the mentioned category of roasted pizza.

The AZTN has determined that Coca-Cola Croatia and other catering establishments have concluded contracts whereby the buyer undertakes to have exclusive Coca-Cola products in the contracted period of fruit juice, ice tea, energy drinks and mineral water.

Coca-Cola Croatia appears to be an inevitable trading partner in most catering establishments, as Coca-Cola's brand is product that must be in stock and chosen by many end users.

Therefore, the commitment of the buyer to the exclusive purchase of certain other products of that undertaking suggests that it is possible to bring customers in a disadvantage compared to the competitors of Coca-Cola Croatia because they can no longer obtain the products or other customers according to which Coca-Cola Croatia does not apply such conditions.

The above-mentioned contractual provisions also point to the possible imposition of the conclusion of the Coca-Cola Beverage Sales Agreement, a trademark, by accepting from buyers of additional obligations which, by their nature or practices in trade, are not related to the subject of those contracts.

Since Coca-Cola Croatia is an entrepreneur who is inevitable business partner in many catering facilities in Croatia, it is an unavoidable business partner, a demand to buy carbonated drinks, buyers, exclusive purchases of Coca-Cola fruit juices, ice tea, energy drinks beverages and mineral waters, is sufficient evidence to initiate the process of establishing a prohibited agreement.

Taking into account the likely dominant position of Coca-Cola Croatia in the market for the production and sale of non-alcoholic carbonated drinks, "Cola beverages", the exclusive purchasing provisions are sufficient indications to initiate a procedure for determining abuse of dominance in order to determine whether Coca-Cola Croatia has market power in the market for carbonated drinks, has been transferred to the market for the production and sale of fruit juices, ice tea, energy beverages and mineral water.

The AZTN initiates infringement proceedings against Coca-Cola Croatia only as the contracting party, which has determined the conditions for the conclusion of the contracts in question.

It should be pointed out that only the initiation of administrative proceedings against a particular undertaking does not necessarily imply a finding of a violation of the CPT, but it means that AZTN is obliged to establish all relevant facts and circumstances, or concrete evidence confirming the indications that led to the initiation of proceedings.

Only on the basis of the finally established factual situation, the AZTN will issue a merits decision in the specific case terminating the proceedings and will, with the exception of business secrets, fully publish on its web site.

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