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Coca-Cola fined $1.9 million by antitrust agency

December 10, 1996

CARACAS, Venezuela (AP) _ Venezuela’s antitrust agency fined Coca-Cola Co. and its local partner $1.9 million Tuesday for violating the country’s anti-monopoly law, but said the alliance could continue to operate.

Coca-Cola cornered Venezuela’s cola market in August when it persuaded the country’s biggest bottler, the Cisneros Group, to break its 57-year-old partnership with rival PepsiCo Inc.

Until then, Pepsi had controlled 80 percent of Venezuela’s cola market and outsold Coke by 4-1. The country was one of the few places in the world where Pepsi dominated Coke.

Overnight, Pepsi was left with no way to bottle, deliver or import its product.

Pepsi contended the Cisneros-Coke alliance violated anti-monopoly laws because no other companies were producing cola, and asked the antitrust agency to dissolve the partnership.

The agency rejected that request and said the alliance was legal. But it ruled that Coca-Cola had illegally monopolized the market for other sodas by bottling and distributing multiple brands of orange, grape, lemon-lime and ``red cola″ drinks.

The alliance, Coca-Cola Hit de Venezuela, cannot sell more than one brand of each flavor, and must offer the licenses for other brands to other companies, the board said.

``This proves that Coca-Cola and Hit is a legal entity and all the accusations that Pepsi made are completely false,″ Coca-Cola spokeswoman Maria Teresa Almarza said.

Almarza said the company’s lawyers were studying the 200-page decision to decide whether to appeal the fine. Both sides have 45 days to make an appeal.

Alberto Uribe, president of Pepsi operations in Venezuela, said the ruling ``not only re-establishes the conditions of free competition in the market, but severely punishes Coca-Cola, which tried to enter the market violating the laws of this country.″

On Monday, Pepsi chief executive Roger Enrico announced the company’s counterattack was under way. Production has resumed and Pepsi expects to regain much of its share of the greater Caracas market within six months.

Enrico admitted, however, that Pepsi may never regain the dominance it held in this oil-rich nation.

In a separate legal action, Pepsi is seeking a $118 million penalty against Cisneros for breaking a contract that was to run through 2003.

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