Irish Competition Authority Decisions

1. An exclusive distribution agreement between Schweppes Ltd (Schweppes) and L. Rose & Co Ltd (Rose) and Chivers & Sons Ltd (Chivers) was notified by Cadbury Ireland Ltd (Cadbury) to the Competition Authority on 30 September l992. The notification requested a certificate or, in the event of a certificate being refused, a licence.

2. The notification relates to an agreement dated 13 May l986 between Schweppes and Rose and Chivers whereby Chivers was appointed exclusive distributor in the State of certain Schweppes and Rose products, namely the Kia-Ora range of whole-fruit drinks and Roses squashes and cordials.

3. Cadbury is an Irish-registered company, engaged in the manufacture and distribution of food and beverages, whose ultimate parent is Cadbury Schweppes plc, of the U.K. Schweppes and Rose are wholly owned subsidiaries of Cadbury Schweppes plc. Chivers is an Irish-registered company which is engaged in the manufacture, distribution and sale of, among other things, beverages.

4. The notification relates to an exclusive distribution agreement, dated 13 May l986. Chivers was appointed exclusive distributor of the products in the State. The supplier agreed not to appoint any other distributor in the State, to sell exclusively to the distributor, and to refer enquiries in the territory to Chivers. Chivers agreed to purchase all its requirements of the products from the supplier, to promote sales and to supply the products in the packages in which they were supplied. Chivers was prevented from seeking customers or establishing any depot outside the territory. Chivers agreed to maintain adequate and suitably qualified staff, and not to divulge confidential information, during the agreement and after termination. Chivers was bound, during the agreement and for one year thereafter, not to deal in competing products, except those being handled at the date of the agreement. Sales targets were to be agreed. The agreement was to continue in force for five years, and yearly thereafter, subject to 12 months' notice of termination. The agreement was replaced by a subsequent agreement between Cadbury Beverages Ltd and Chivers, covering the same products, dated 9 May l99l, which has been notified by each party separately (CA/506/92E and CA/509/92E).

5. Section 4(1) of the Competition Act states that 'all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void.'

6. Section 3(1) of the Competition Act defines an undertaking as 'a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.' Schweppes, Rose and Chivers were each engaged in the manufacture and distribution of goods for gain, and they were therefore undertakings within the meaning of the Act. The agreement was an agreement between undertakings.

7. The Authority considers that an exclusive distribution agreement such as that between Schweppes, Rose and Chivers, offends against Section 4(1) of the Act, for the reasons stated in its category licence for exclusive distribution agreements (Decision No. 144 of 5 November l993, para 14).

8. The agreement, however, was replaced by a new agreement dated 9 May, l99l, and effective from l January, l99l. The notified agreement, therefore, had expired before the Act came into force. Thus, in the Authority's view, there was not an agreement between undertakings in existence at, or since, the time the Act came into force. The notification is therefore invalid and the Authority is unable to grant a certificate or licence.

9. In the Authority's opinion, Schweppes Ltd, L. Rose & Co Ltd and Chivers & Sons Ltd were undertakings within the meaning of Section 3(1) of the Competition Act. As the entire agreement had expired before 1 October 1991, the notified arrangements do not constitute an agreement which was in existence at the time, or since, the Act came into force; it cannot be validly notified under Section 7(1) or 7(2) of the Competition Act and the Authority cannot issue a certificate or licence in respect of the notification.

For the Competition Authority

Patrick M. Lyons

Chairman

3 December 1993.