Assessment of a proposed exclusive dealing arrangement and resale price maintenance by Coca-Cola Beverages Malawi Limited

Coca-Cola Beverages Malawi Limited(CCBML) applied for authorization of an Exclusive Dealing Arrangement (EDA) and Resale Price Maintenance (RPM) on 27th February, 2024. The proposed transaction involves CCBML entering into EDA and RPM with its distributors.

CCBML is a soft drink; carbonated drinks and stills manufacturing company. Its distributors are actively involved in day-to-day distribution of the products across the country. In return, to the services provided, they get commission.

Investigations revealed that:

  • There are some distributors that are non-exclusive, about 68%;
  • The proposed agreements would not affect the distribution and availability of rival products since manufacturers of those products have their own distribution channels that they use to reach out to their respective customers;
  • The parties applied for a fixed RPM whereby CCBML dictates prices to the distributors. This type of RPM is highly anticompetitive as there is no competition on prices;
  • The transaction would improve service delivery in distribution of the non-alcoholic beverages in terms of availability of the products, as they would devote all of their efforts to CCBML products;
  • The transaction would enable CCBML to transfer knowledge and skills to its distributors through the continuous specialized training support. This might likely enhance their competitiveness in delivery of their goods on the market;
  • The proposed arrangements would, through its restrictions, result in substantially narrowing down the opportunity for small-scale distributors to generate additional income for their business growth and livelihood.

Upon deliberations, the Commission authorized the proposed Exclusive Dealing Arrangement (EDA) and Resale Price Maintenance (RPM) between Coca-Cola Beverages Malawi Limited (CCBML) and its distributors with a condition that CCBML should recommend a maximum resale price maintenance to allow distributors compete below the set price.