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. Last Updated: 07/27/2016

Coca-Cola Told to Review Contracts

The Federal Anti-Monopoly Service has asked Coca-Cola to review its retail contracts in Russia or face charges of violating anti-monopoly legislation in an unprecedented move that some market watchers say could affect the rest of the soft and alcoholic drinks industry.

"We are looking into severe violations by Coca-Cola of Russian [anti-monopoly] legislation in which it limits access to competitors through exclusive contracts," Teimuraz Kharitonoshvili, a Federal Anti-Monopoly Service representative said by telephone Tuesday.

Kharitonoshvili said that the nationwide probe had been triggered by a case in Krasnoyarsk, where the regional department of the anti-monopoly watchdog started a case against Coca-Cola after being tipped off by the local circus. The circus' contract with Coca-Cola included a clause banning it from selling soft drinks from other producers.

Kharitonoshvili said that Coca-Cola agreed to make adjustments in its Krasnoyarsk region contracts and present them at the next anti-monopoly service hearing in Krasnoyarsk in September.

The watchdog, however, will ask for copies of Coca-Cola's other Russian contracts for further investigation, he added.

"The best Coca-Cola can do is get rid of violations without our interference. ... Otherwise, it can entail anything from fines to liquidation of its business in Russia," Kharitonoshvili said.

"We are working with the state bodies, supplying all the documents that they need," Coca-Cola spokesman Vladimir Kravtsov said by telephone Tuesday, but he refused to elaborate.

Maintaining exclusive contracts with retail outlets is a common practice among manufacturers that will have to be abandoned completely if the anti-monopoly service sets a precedent, said Pavel Shapkin, chairman of the Russian Association of Alcohol Producers.

"If this precedent takes place, then it will mean that all contracts can be torn up," he said.