The competition watchdog has scuttled tycoon Humphrey Kariuki’s bid to exclusively import and distribute 214 premium wine and spirit brands including Bacardi-Martini labels.
Competition Authority of Kenya (CAK) said the move would have seen the billionaire’s company, WOW Beverages, amass a lot of market power and lock out rivals at the expense of customers.
The decision has halted a series of planned exclusive distribution agreements between WOW Beverages and various alcohol manufacturers, with the local firm now exposed to competition from other importers.
“The CAK has rejected an exemption application by WOW Beverages in which the firm was seeking to enter into exclusive distributorship agreements with seven international suppliers,” the regulator said in a statement.
“The Authority is of the opinion that parallel imports, through legal channels, are likely to bring more benefits to Kenyan consumers, including the enhancement of intra-brand competition which often leads to lower prices.”
WOW Beverages told the regulator that its exclusive deals were necessary to protect its investments besides guaranteeing the products’ quality in the local market.
The CAK, however, ruled that the company did not prove the claims.
Had the application been granted, WOW Beverages would have emerged with the largest product variety, beating its rivals including East African Breweries (EABL) #ticker:EABL, which has tens of brands.
The company had initiated the distribution deals with Gallo Vineyards Inc (which trades as E&J Gallow Winery Europe), Vina San Pedro Tarapasca SA, Felix Solis Avantis SA, Afrique Interlink (PTY), Interlink (PTY) Limited, Edrington Group Limited and Tradall SA (Bacardi-Martini Group).
The multinationals were to appoint WOW to import, purchase, promote, exclusively distribute and sell their selected portfolio of products in the Kenyan market exclusively.