Tuesday, October 19, 2004
Two interesting developments from the EU in the news today.
The BBC reports that the European Competition Commission may enter into a settlement with Coca-Cola, putting an end to five year investigation into the company's marketing practices. At issue are inducements given to retailers to link sales of more popular brands to lesser brands through monopolization of shelf space. Similar allegations were brought in the US by a former Coca-Cola employee. The dispute with the employee was settled last Summer.
Today's Wall Street Journal reports that the Commission may file a suit against Germany challenging its bottling law, which requires the use of reusable bottles and deposits. The law allegedly limits competition by making it more difficult for foreign competitors to market their bottled beverages in Germany. Part of the problem seems to be lack of harmonization on recycling laws. For example, the article reports that France prohibits the use of reusable bottles for water. Another source of the problem is the practice of some discount retailers to cut back on branded beverages and instead sell their own discount labels, which are easier to return to the discount retailers for reuse. The article states that Nestle has lost about $ 60 million in sales since the law took effect in 1992. The case offers a nice example of the intersection between regulation and competition policy. Although I have not looked at this issue in depth, my sense from the article is that the law is not anti-competitive and the costs described represent the adjustment to new pro-environmental regulation.