ZAMBIA: DISTRIBUTORS OF CLEAR BEER FINED FOR TYING AND BUNDLING
The Board of Commissioners of the Zambian Competition and Consumer Protection Commission (CCPC) has fined three local distributors of clear beer between 3% and 4% of their respective annual turnovers for breaching the Competition and Consumer Protection Act, 2010 (Competition Act).
The CCPC announced that the independent distributors hold a dominant position in the market for the supply of clear beer and had been selling high demand clear beer on condition that retailers also purchase slower moving beer products. The Competition Act prohibits a dominant firm from making the conclusion of a contract subject to supplementary conditions unrelated to the subject matter of the contract, if that conduct limits access to markets, unduly restrains competition, or otherwise adversely affects trade or the economy in general.
The CCPC noted that the practice of tying places small- and medium-sized enterprises at a financial disadvantage as they are forced to purchase products they would not otherwise have purchased and will incur losses associated with low demand products.
The CCPC is not the only regulator to be investigating the market for clear beer. In July 2021, the COMESA Competition Commission (CCC) launched an investigation into possible market allocation and/or territorial restrictions by beer producing companies operating the Common Market (including in Zambia). The CCC indicated that it considers that beer producers may have market allocation and/or territorial restrictions in their distribution agreements with third party independent distributors. The CCC’s preliminary concern was that these agreements reinforce national borders, thus affecting trade among Member States and restricting competition in the Common Market. This investigation is ongoing.