BACARDI GIVES ASSURANCES ON EXCLUSIVITY
30 Jan 2003 11:15 AM
Bacardi-Martini Limited has given the OFT assurances that it will not
enter into or maintain certain types of agreement with on-trade
retailers (licensed outlets selling drink for consumption on the
premises, such as pubs and restaurants).
The agreements covered are those which, according to the OFT, have
the effect of excluding other makes of white rum from on-trade
outlets in favour of Bacardi's 'Carta Blanca'. These agreements have
been the subject of an extensive investigation by the OFT under the
Competition Act 1998. In the light of the assurances, the OFT has
closed its investigation. The OFT's decision to close its
investigation into the agreements was taken in the light of Bacardi's
change in behaviour and the OFT's other casework priorities.
John Vickers, Director General of Fair Trading said:
'The assurances remove the competition problem that prompted the
investigation and should widen competition opportunities in the
market. It would not be appropriate, in the circumstances of this
case, to devote more resources to it.'
NOTES
1. The types of agreement covered by Bacardi's assurances are annexed
to this press release.
2. The OFT's investigation into Bacardi under the Competition Act
1998 started on 13 June 2000. On 28 June 2002 Bacardi was given
written notice that the Director General proposed to make a decision
under the Act that Bacardi had behaved anti-competitively, infringing
UK competition law (see press notice 38/02).
3. The OFT believes that there continue to be reasonable grounds for
suspecting that there was an infringement from March 2000 and during
the period of the investigation. Bacardi has rejected this view and
has given the assurances without prejudice to its position. Bacardi
considers that the factual and economic evidence on the OFT's file
shows that Bacardi is not in a dominant position.
4. Powers under the Competition Act 1998
The Act gives the OFT powers to investigate suspected infringements
of the Act's prohibitions:
i) Chapter I prohibits agreements between undertakings, decisions by
associations of undertakings or concerted practices which have the
object or effect of preventing, restricting or distorting competition
in the UK (or any part of it) and which may affect trade within the
UK (or any part of it.
ii) Chapter II prohibits conduct by one or more undertakings which
amounts to the abuse of a dominant position in a market which may
affect trade within the UK (or any part of it).
5. In this press release the functions of the Director General of
Fair Trading (DGFT) under the Act are for simplicity described as the
functions of 'the OFT'. The Enterprise Act 2002 will replace the
office of the DGFT with the OFT, to which will be transferred the
DGFT's functions. The relevant provisions of the Enterprise Act are
not yet in force.
ANNEXE
Voluntary Assurances given by Bacardi-Martini Limited to the Director
General of Fair Trading on 28/01/03 (See OFT press release 10/03)
Definitions
In these assurances:
"Bacardi" means: Bacardi-Martini Limited
The "Director" means: the Director General of Fair Trading
"Retailer" means: a person that sells alcoholic spirit drinks to
consumers in retail premises and is licensed to sell such drinks for
consumption in or on those premises, other than the holder of an
occasional licence
"Promotional Support Arrangements" agreements with retailers under
which a brand owner provides assistance to the retailer in the
promotion of the brand owner's product to customers in the retailer's
premises
"Solus" status means: where the retailer agrees that the producer's
branded product will be the only brand within the relevant product
type stocked or offered for sale in the retail premises
"Solus Pouring" status means: where the retailer agrees that the
producer's branded product will be the only brand that is served to
customers who do not specify a brand within the relevant product type
"Solus Optic" status means: where the retailer agrees that the
producer's branded product will be the only brand within the relevant
product type displayed on optic in the retail premises without any
other stipulations as to display or status
"White Rum Products" means: clear, colourless, full strength rum made
from sugar cane (molasses) or equivalent materials, distilled at
under 96 degrees centigrade, aided by repeated charcoal filtration to
remove impurities
De-Listing
1. Bacardi will not conclude Promotional Support Arrangements with
Retailers which contain terms that require any specified White Rum
Products of competitors to be excluded from the retail premises in
question.
Solus
2. Bacardi will not conclude Promotional Support Arrangements with
Retailers which contain terms that require the Retailer to grant
Solus status to Bacardi for its White Rum Products. Should Bacardi be
asked to or wish to compete for relevant business on terms providing
for Solus status it will wish to discuss the issue with the Office
with a view to seeing whether that is justified in the particular
circumstances.
Solus Pouring
3. Subject to the exception set out in paragraph 6 below, Bacardi
will not conclude Promotional Support Arrangements with Retailers
which contain terms that require the Retailer to grant Solus Pouring
status to Bacardi for its White Rum Products.
Solus Optic
4. Subject to the exception set out in paragraph 6 below, Bacardi
will not conclude Promotional Support Arrangements with Retailers
which contain terms that require the Retailer to grant Solus Optic
status to Bacardi for its White Rum Products.
Duration
5. Any contractual commitment covered by paragraphs 3 and 4 above
will normally not exceed one year in duration or will provide for
termination after one year or less; no Promotional Support
Arrangement will be made for a term exceeding two years.
Exception
6. Subject to the limitations on duration set out in paragraph 5
above, Bacardi may conclude Promotional Support Arrangements with
Retailers including Solus Pouring or Solus Optic status for its White
Rum Products where a Retailer
(a) includes an express requirement for suppliers to offer
Promotional Support Arrangements including Solus Pouring or Solus
Optic status in the context of a tender process involving other
spirits suppliers; and
(b) Bacardi would, on a reasonable and objective assessment, risk
having its White Rum Products excluded from the retail premises in
question if it failed to comply with the Retailer's requirements.
Duration of Assurances
7. These assurances shall apply from the date on which they are
signed by Bacardi. Bacardi will notify the Director in writing if it
intends to withdraw the assurances in whole or in part.
press notices: xt. 8993 http://www.oft.gov.uk
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