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. Last Updated: 07/27/2016

EU's Dawn Raids Fresh Blow to Coke




BRUSSELS, Belgium -- European Union investigators have raided the offices of Coca-Cola Co. in four countries on suspicion the company abused its position as the world's leading soft-drinks maker by offering retailers unfair incentives to shut out competitors.


EU Competition Commissioner Karel van Miert confirmed Thursday, "I have ordered my services to carry out dawn raids'' at Coke offices in Britain, Germany, Austria and Denmark over the past two days to seize documents.


"A dominant company on any market cannot indirectly bully competitors by pushing its customers to buy less of the competitors' products,'' he said.


The chief director of Nordic Coca Cola, Svend Ivan Petersen, said: "We were naturally very surprised by the raid. But we opened up our files and the materials the commission wanted to see, and tried to cooperate.


"But we do not understand the charges," Pertersen said. "We have not done anything wrong.''


A statement from Coke's London office said: "We are cooperating fully with the investigation. We strongly believe the investigation will prove we are very much in compliance with the spirit and letter of all competition laws.''


The raids are a fresh blow to Coca-Cola in Europe as it recovers from a health scare that led to its drinks being removed from stores in several nations after Belgian schoolchildren complained they fell sick from drinking Coke.


European Commission competition regulators will examine evidence gathered in the raids and could decide to launch a full-scale investigation into the suspicions that Coke was illegally offering retailers perks to boost its market share. Such an investigation would likely last at least a year.


Under EU rules, companies found guilty of infringing regulations governing fair business competition can face fines of up to 10 percent of their turnover, although in practice fines have been much smaller.


The commission was apparently looking for evidence Coke offered retailers incentives to increase sales and stop selling competing drinks. It was unclear if the EU executive acted on complaints from one of Coke's competitors or from disgruntled retailers


The commission last week fined British Airways 6.8 million euros ($7 million) for offering similar incentives to travel agents.


The EU executive also raided Belgium's Interbrew, the world's fourth largest brewer, last week to find out if it is using its dominance of the Belgian market to muscle out competitors.


Coke's position as the world's biggest soft drinks supplier has already brought it into conflict with European regulators.


The company scaled down plans to acquire operations from Britain's Cadbury Schweppes PLC after complaints from the European Commission.


French authorities have blocked Coke's attempts to purchase the Orangina soda brand from Pernod Ricard SA.