Drinks firms fight Schweppes deal
Monday 18 January 1999
Submissions have been filed by Britvic, which is part of Bass, Virgin, which controls the Virgin Cola brand, and the Scottish group AG Barr, which produces Irn-Bru. They argue that the deal would give Coca-Cola 50 per cent of the UK soft drinks market and be against consumer interests.
Stephen Davies, managing director of Britvic, said: "We have genuine concerns. Coca-Cola is already the dominant player and they would be acquiring another major slice of the market. It is the augmentation of a monopoly position."
Robin Barr, chairman of AG Barr, said: "It will substantially increase the clout of the company that is already the leader by some distance. That has to be wrong. We hope the OFT will take the same view."
Under the deal, announced in December, Cadbury is selling its non-US soft drinks to Coca-Cola in order to concentrate on its confectionery interests and its US soft drinks business, chiefly Dr Pepper.
The brands included in the deal are Schweppes, Dr Pepper, Canada Dry Crush and Oasis, in 120 countries. Coca-Cola's portfolio already includes Coca-Cola, Lilt, Sprite and Fanta.
Figures from AC Nielsen show that the UK take-home drinks sector was worth pounds 3.4bn last year. Estimates suggest that Coca-Cola has 40 per cent of the market, Britvic 20 per cent, AG Barr 6 per cent and Virgin 2 per cent.
Companies such as Britvic say gaining the Schweppes brands will take Coca-Cola's share to over 50 per cent, potentially restricting customer choice. It claims that Coca-Cola will be able to use the power of the "must-have" Coca-Cola brand to persuade retailers to stock its other brands as well, potentially excluding other products from retailers' shelves.
Britvic also says that the latest in a series of deals between Cadbury and Coca-Cola amounts to "acquisition by stealth". They formed a bottling joint venture, Coca-Cola Schweppes Beverages, in 1987. In 1996 Cadbury sold its 51 per cent stake in CCSB to Coca-Cola. Now the US giant is taking control of the Schweppes brands. Rivals say the "drip-feed" nature of the deals has enabled them to evade scrutiny by the competition authorities.
Cadbury says that as Coca-Cola already controls bottling and distribution of Schweppes brands in the UK, the latest change is a minor development.
Competitors had until 29 December to make submissions to the OFT, which is expected to make a decision next month.
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