By Shakeh AvoyanA Greek-owned company bottling and selling Coca-Cola in Armenia was fined about $100,000 by a state regulator on Wednesday for allegedly violating anti-trust regulations to hamper the entry of rival PepsiCo into the local market.
The State Commission on the Protection of Economic Competition ruled that Coca-Cola Bottlers Armenia SA (CCBA) abused its still “dominant position” in the market to ward off competition from Jermuk Group, the country’s biggest mineral water firm that began importing Pepsi soft drinks last year.
The ruling followed a written complaint filed by Jermuk. The company claimed that the Coca-Cola franchise threatened to withdraw its popular products from a growing number of grocery stores that now sell Pepsi beverages.
CCBA executives denied the claims during heated hearings chaired by the head of the regulatory body, Ashot Shahnazarian. They threatened to challenge the penalty in court, saying that their competitors failed to come up with any evidence.
Jermuk representatives presented written statements by shop owners in Yerevan that claimed to have been pressured by the Coca-Cola distributor to stop selling Pepsi drinks. One of them, Edgar Ghazarian, said: “They were told: ‘If there is a Pepsi fridge in your store, you must hand it back [to Jermuk] and sell only Coca-Cola, or we’ll take back our Coca-Cola fridges.’ And so the owner feels that he had better return the Pepsi fridge because Coca-Cola still sells better.”
“Let both types of drinks remain there and let the consumers decide which is better,” Ghazarian told RFE/RL.
CCBA, which has a bottling plant and a distribution center in Yerevan, was set up in 1995 and has since dominated the Armenian market of non-alcoholic beverages. According to the regulatory commission, it currently accounts for at least 75 percent of the sector’s sales.
CCBA is mostly owned Coca-Cola Hellenic Bottling Company, one of Europe’s largest soft drink suppliers. Its second major shareholder is Vache Manugian, a London-based Lebanese-Armenian tycoon who fell out with Armenia’s leadership in 2000.
By contrast, PepsiCo has no plants in Armenia. Its worldwide brands became available in the local market only last year when Jermuk Group began importing them from neighboring Georgia. Jermuk is owned by Ashot Arsenian, a parliament deputy close to Prime Minister Andranik Markarian.
The Coca-Cola bottler is the second Greek-controlled company sanctioned by the commission in less than a month. ArmenTel, the Armenian subsidiary of Greece’s telecom giant OTE, was fined $400,000 for failing to end a serious breakdown of its mobile phone network, the biggest in Armenia.