Bia Tosha, one of the largest beer distributors in Kenya, has lost its bid to control 22 beer distribution routes in Nairobi.
Yesterday, the Court of Appeal ruled in favour of the East African Breweries Ltd (EABL) in a case against Bia Tosha where the latter had sought monopoly over the routes.
The Appeal Court set aside a 2016 High Court ruling that gave Bia Tosha control of the routes. The ruling is expected to open the distribution of EABL products in parts of Nairobi to other companies that could not access these markets owing to claims of exclusivity by Bia Tosha.
The court ruled that it was anti-competitive and contrary to the Competition Act for Bia Tosha to make the claims. It also noted that such a move would occasion financial loss to other distributors and inconvenience EABL customers.
The Appeal Court referred EABL and Bia Tosha to arbitration as per their distribution agreement while dispensing an application for contempt and arrest of EABL executives.
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Bia Tosha has the right to appeal the judgement within 30 days at the Supreme Court.
“Order made on June 29, 2016 is hereby set aside and substituted with an order staying the proceedings before the High Court pending the dispute being referred to arbitration,” reads the ruling made by a three bench judge on Friday.
“The dispute between the first appellant (EABL) and the first respondent (Bia Tosha) shall be referred to arbitration in accordance with the respective parties’ distributorship agreements.”
Bia Tosha and EABL entered into a partnership in 1997. Bia Tosha was then distributing EABL products in Kiambu. In 2000, Bia Tosha would get an even bigger territory that comprised Baba Dogo, Kariobangi North and Dandora Phase I and II. For the latter deal, Bia Tosha paid a goodwill fee of Sh6.63 million.
Bia Tosha’s territory grew in 2006 and included the area between Kitengela and Namanga, parts of Langata and Rongai as well as Ngong Road and Dagoretti, making it one of the largest distributors. For the new contract, the distributor paid Sh27.3 million as goodwill.
After clinching the larger territory, EABL had demanded that Bia Tosha gives up the routes it had been servicing in Nairobi’s Eastlands.
This ignited the dispute after EABL assigned other distributors in the area. In 2011, Bia Tosha had demanded a refund of the goodwill it had paid to EABL for the distributorship in Baba Dogo, Kariobangi North, Dandora I and Dandora II. That was when Bia Tosha filed its suit that was determined by the High Court in 2016.