Senate puts Competition Authority to task over EABL's dominance
An EABL employee checks on beer quality before labelling at the company's plant in Ruaraka, Nairobi.
The Senate has put to task the Competition Authority of Kenya (CAK) over East African Breweries Limited's dominance in the Kenyan beer market.
Nominated Senator Petronila Were questioned the competition watchdog over allowing EABL to claim ownership of the universal euro design of brown beer bottles by engraving them with its trademark, which limits access to the bottles by its competitors.
The senator tasked CAK with investigating a possible contravention of the Competition Act by the brewer and demanded that the agency bring the company to book.
The Senate also asked the watchdog to state measures taken by the government to ensure EABL does not use its dominant market position to perpetrate anti-competition practices against smaller brewers.
In his response to the Senate, CAK Director-General Wangombe Kariuki said he had no information on whether EABL or any other company has intellectual property rights to the contested bottles.
He said he has sought the information from the Kenya Industrial Property Institute (KIPI).
The complaint
Keroche Breweries and Bunge la Mwananchi had written to CAK alleging the EABL is unjustifiably embossing bottles and threatening legal action against any parties using them.
Keroche also uses the brown bottle to package its Summit Lager.
Beer brands are easily substituted with each other especially if the bottles look similar, which leads manufacturers to ring-fence their bottles by embossing them to prevent competition from other brands.
A court ruled in 2016 that the euro design is universal and therefore does not belong to any company, so the brewer had no right to claim intellectual rights to the bottle.
CAK's response
Mr Kariuki said the authority has not determined whether EABL's conduct constitutes a breach of competition laws due to pending court cases over the matter.
“Premised on complaints leveled against EABL, the authority in 2014 initiated a broad investigation of the alcoholic beverages sector to unearth anticompetitive conduct by EABL or any other player,” Mr Kariuki said in his response.
“EABL, through its subsidiary Kenya Breweries Ltd, was found to enjoy a dominant position in the production of beer (brewed alcoholic beverages) in Kenya with about 90 per cent market share based in sales revenue.”
CAK also said the investigation found that the brewer has distribution agreements which provide for territorial and brand exclusivity, lessening intra-brand competition.
