Coca-Cola Agrees to Share Its Fridges

BRUSSELS -- Coca-Cola reached an agreement with the European Commission on Tuesday to settle a five-year antitrust case that accused the world's biggest soft drinks maker of unfairly shutting out competitors.

European Union investigators had probed whether Coke abused its dominance in the cola market to strengthen its hand in other soft drinks sectors.

The commission accused Coca-Cola and its European bottlers of offering retailers incentives to give Coke products prominent shelf space, thus blocking attempts by other companies to get a toehold in the market.

"Consumers will generally have more choice at cafes, pubs and shops, and will therefore be in a position to choose on the basis of price and personal preferences rather than pick up a Coca-Cola product because it's the only one on offer," Competition Commissioner Mario Monti told a news conference.

"The nature of the industry, the complexity of the issues and the great number of territories under investigation is probably unprecedented," he said. The probe had spanned most of Monti's tenure as competition commissioner.

The commission aimed to break open the market for competitors like Pepsi in a five-year agreement that phases in completely by Jan. 1, 2006. Final approval is expected in March 2005, after consultation with market players.

Coca-Cola chief executive Neville Isdell met with Monti and said in a statement, "We look forward to a constructive and close working relationship."

Coke spokesman Jon Chandler said of the agreement's provisions, "It can't be predicted with certainty how if at all the market will react to such changes. We do believe that we'll be able to compete vigorously while adhering in full to the undertaking."

Coca-Cola's smaller rival, PepsiCo, whose complaints kick-started the investigation five years ago, said it was pleased with the final outcome.

"The settlement agreement should result in significant changes in Europe's 17 billion euro ($21 billion) carbonated soft drink market, increasing competition and finally giving retailers the freedom to offer consumers more product choices," PepsiCo spokesman Dick Detwiler said.

Coca-Cola agreed to end exclusive agreements with the companies it supplies and stop offering rebates to customers who improve their sales. Instead, rebates will reflect current sales without comparisons against the past.

The U.S. drinks giant also committed itself to end an arrangement requiring stores buying its bestselling Coke and Fanta drinks to also buy less popular drinks, such as Vanilla Coke. But Coke and others can still offer inducements to stores to place their products next to each other.

Retailers will be free to use one-fifth of the space in Coca-Cola-branded refrigerators to stock whatever they like, including anything from milk to Pepsi.

Coke may finance small cafes and other outlets as in the past as an alternative to bank loans, but with new limits.

The rules can apply wherever in the EU Coca-Cola has more than 40 percent of national sales and twice the market share of its next competitor. The deal also covers Norway and Iceland.