Safeguards required in Nordic soft drinks deal

Date: 10/07/1997

COMPETITION officials are seeking minor alterations to the plans of Coca-Cola and Carlsberg to create a bottling company in the Nordic countries.

Determined to prevent the two firms creating a dominant position in the Nordic markets for soft drinks and colas, European Commission investigators are trying to build safeguards into the deal before it is cleared soon after the summer break.

In May, the Commission announced that it was beginning a detailed inquiry into the creation of Coca-Cola Nordic Beverages (CCNB), a new firm 51&percent;-owned by Carlsberg A/S, with The Coca-Cola Company holding the remaining share.

Under the deal, the companies will amalgamate their soft drinks activities in Scandinavia, introduce new licensing agreements and form a distribution joint venture with Swedish brewer Falcon.

CCNB will act as the holding company for all the soft drinks operations of the two firms in Denmark and Sweden. In time, the venture will take responsibility for bottling, selling and distributing products in Norway and the Baltic states.This is a typical Coca-Cola operation. The Atlanta-based drinks giant designates 'anchor bottlers' as part of its world-wide distribution system and takes major stakes in them.

The link-up will be based on the company's long-standing relationship with Carlsberg and will help the latter in its strategy of diversifying into non-alcoholic beverages.

During its initial inquiry, Commission officials found that the joint shares of the parties were more than 60&percent; in the Danish cola market and more than 40&percent; in the Danish market for non-cola soft drinks.

Coca-Cola is the leading producer and retailer of cola in Denmark, followed by Pepsi-Cola. Jolly Cola, a brand majority-owned by Carlsberg, used to be the market leader in the Seventies but has since dropped back to number three.

Even before the creation of CCNB, Carlsberg was responsible for the production and distribution of Coca-Cola brands in Denmark via its 100&percent;-owned bottling subsidiary Dadeko.

Tuborg, a brewer part-owned by Carlsberg, also markets fizzy soft drinks in Denmark under the brand name Tuborg Squash, while Carlsberg produces a sparkling mineral water known as Carlsberg Kurvand.

This is the second time Coca-Cola has run into regulatory troubles with the Commission.

Last year, officials threw obstacles in the way of Coca-Cola's buy-out of partner Cadbury-Schweppes, with whom it owned six bottling plants in the UK known as Coca-Cola and Schweppes Beverages (CCSB).