Heineken distributors win first round in tender feud

Heineken is locked in a contract row with three distributors. FILE PHOTO | NMG
Heineken is locked in a contract row with three distributors. FILE PHOTO | NMG 

Beer maker Heineken East Africa Import Co Ltd has been stopped from terminating a contract entered into with companies it had hired to distribute its products.

High Court judge Joseph Onguto has ruled that the order will remain in force until November, when all the parties in the matter will be heard.

The judge said the interest of justice was “tilted in favour of not allowing Heineken to terminate the contract,” as the issue is the subject of a case currently pending before court.

Maxam Ltd, Uganda’s Modern Lane Ltd and Tanzania’s Olepasu Ltd are seeking to stop termination of their contract to distribute Heineken larger beer in Kenya, Uganda, and Tanzania.

The distributors had sought to extend interim orders issued by the High Court in April last year and which according to the law, were deemed to have lapsed in April this year.

In the case filed at the High Court last year, the distributors argued the manufacturer had given them a notice in January, 2016 of the intention to terminate the contract signed in 2013 without following the procedure.

“The companies have made massive investment in distributing Heineken beer brand in Kenya, Uganda and Tanzania. It is illegal for the manufacturers to terminate the contract without valid reasons,” lawyer Philip Nyachoti for the distributors said.

The three firms, he said, injected a turnover of Sh1.8 billion in 2015 in their distribution of the brand in Kenya, Uganda and Tanzania; and that their expansion plan for more distribution will go to waste if the contract is terminated.