10 February 2018

Ethiopia: Ambo, Coca's Alleged Merger in New Predicament

The Appellate Tribunal has injuncted the ruling of the lower tribunal as an illegal merger

The Appellate Tribunal of Trade Competition & Consumer Protection Authority (TCCPA) injuncted the ruling of the lower Tribunal over Ambo Mineral Water and the East African Bottling Company for making an illegal merger.

The duo appealed jointly claiming that the lower tribunal passed a verdict against them without reviewing their evidence. The Tribunal misinterpreted the merger, which has not been realised yet, and rejected their preliminary objection without valid ground, according to their appeal.

The case was initiated on June 16, 2017, when the case processors of the Tribunal filed a suit accusing the duo of merging illegally and declaring their union in January 2017 to their staff and distributors at the United Nations Economic Cooperation of Africa (UNECA).

The appeal stressed that the lower court did not review the video evidence of the two declaring their merger during a meeting held by the companies at the conference hall of the United Nations Economic Commission (ECA).

During the meeting, the management of the two companies announced the merger and informed their distributors it was mandatory to carry the products of both companies, the suit reads. The suit also claimed that the duo have been exchanging workers, logo and letterheads as the South African firm SABMiller acquired major shares in both companies, arranging a merger without getting approval from the Authority.

Both East African Bottlings, a subsidiary of the South African Bottling Company (SABCO) and owned Nigussie Hailu, and Ambo, established in 1930, is owned by SABMiller and Tewodros Ashenafi, a renowned local businessman, denied the merger in their statement of defence.

Fekadu Petros, East African's lawyer, defended stating that an approval from the Authority was not required without the existence of any merger, while Ambo's lawyer, Israel Tekele, argued that only documents can prove the merger.

In October, the Court ordered the Authority's case processor to present a video of their meeting at the ECA and documented evidence from the Ministry of Trade (MoT) to verify whether the alleged announcement of a merger exists or not.

The presiding judges, on December 20, 2017, ruled in favour of the Authority, represented by Kenna Waq, declaring the merger illegal without the video and document evidence from the MoT were presented to the Tribunal. The Tribunal fined the duo five percent each of their companies last fiscal year turnovers.

Displeased with the ruling of the Adjudicative Tribunal, the two companies appealed jointly, requesting the higher tribunal to reverse the verdict and the fines levied on them. Admitting their appeal, the Tribunal adjourned the case to February 14, 2018, for oral litigation.

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