EABL appeals ruling over beer distributor

Beer maker East Africa Breweries Ltd (EABL) has moved to the Court of Appeal contesting orders which temporarily stopped it from appointing another supplier to replace its single-largest distributor.

EABL in its appeal filed by lseme, Kamau and Maema Advocates Wednesday stated that High Court Judge Joseph Onguto erred in his ruling when he declined to consider that there were other contracts with third parties that would be affected if the contract remains operational.

Court documents filed at the registry by the beer maker read that the judge also failed to consider that the case between itself and Bia Tosha was of a commercial nature and not about constitutional rights. “The ruling appealed from, to the extent set herein, is unreasonable, wrong in law and under any known constitutional principles ...”

EABL’s appeal read that Bia Tosha was using the court order to ‘ring-fence its territories’ away from competition. They continued: “The ruling and the orders appealed from are contra statute and have the effect of creating an exclusive status that is expressly prohibited by the competition Act.”

The order by Judge Onguto, the beer maker lamented, had in effect extended the contract between it and the supplier beyond their initial agreement. The judge issued the order after Bia Tosha filed a petition claiming that EABL had threatened to terminate its distribution contracts for 22 routes in Nairobi.

The distributor claimed that it has paid over Sh38 million in goodwill for the distribution routes and that EABL declared the routes as part of sections, which have been making profits over the years. It claimed that global beer maker Diageo Plc, which is the majority shareholder in EABL, was arm-twisting suppliers in a bid to block them from dealing in rival beer manufacturers’ products.

“Diageo posted the following message (video link) to its employees in Kenya on how to deal with Bia Tosha, which is the 1980 Lee Kuan Yew famous ‘Iron’ speech. It is the same threat that Diageo continues to use to intimidate its distributors in Kenya,” Bia Tosha claimed in its court papers.