Going Soft on Soft Drinks: The Croatian Competition Agency considering Coca-Cola’s commitments

In February 2019, the Croatian Competition Agency (the “Agency”) launched an official investigation against Coca-Cola HBC Hrvatska d.o.o. (“Coca-Cola”), in order to establish whether the company concluded prohibited restrictive agreements and/or abused its market dominance.

After reviewing the local market for distribution of non-alcoholic beverages in the Croatian HORECA channel, the Agency came across a business cooperation agreement where Coca-Cola obliged the customer to exclusively purchase all his requirements including fruit juices, ice teas, energy drinks and mineral waters exclusively from Coca-Cola’s range of products, simultaneously obliging him to offer the entire product portfolio of Coca-Cola, but also all of Coca-Cola’s new products in the soft drinks category. Apart from this, the Agency determined that some of Coca-Cola’s business cooperation agreements obliged the customers to keep only Coca-Cola’s products in their stock. Bearing in mind the likeliness of Coca-Cola’s dominant position in production and sale of non-alcoholic soft drinks in Croatia, the Agency believed to have sufficient evidence to initiate an official investigation.

Within six months after the launch of the investigation, Coca-Cola proposed to undertake certain measures in order to mitigate the negative impact of its conduct. These included the following changes to its business cooperation agreements:

• concluding separate agreements for sale of dominant and non-dominant products;
• formulation of exclusive sale provisions so that the customer may choose between (i) exclusively having Coca-Cola’s products in its offer, thereby excluding similar products of other manufacturers or (ii) having Coca-Cola’s products available in its offer, in which case there is no restriction in relation to products of other manufacturers;
• maximum term of agreements with exclusive purchase clauses for five years;
• separate calculation of market investments per each product category; and
• deletion of the provision in new business cooperation agreements, whereby such agreements are also applicable to new products.

Apart from the mentioned amendments to the agreements, Coca-Cola proposed to implement a special competition law compliance program, as well as a special training programme for its employees. Coca-Cola undertook to implement the respective programmes within four months upon receiving the Agency’s greenlight.

The Agency seems to believe that Coca-Cola’s proposal is proportionate to the possible negative effects of the behaviour in question on the relevant market. Consequently, on 29 October 2019, it has published a notification stating that it intends to accept Coca-Cola’s proposal, and also requested all interested parties to deliver any objections and thoughts until 18 November 2019. Third party feedback may well prove to be a decisive factor in how the proceedings ultimately play out.