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EABL and distributor row moves to Appeal Court

NEWS
By Frankline Sunday | August 16th 2016
PHOTO: COURTESY

The row between East African Breweries Ltd and its leading distributor Bia Tosha has intensified, with the Court of Appeal last week handing the brewer a temporary reprieve in the multi-million-shilling dispute over distribution rights.

This comes following a court ruling in an appeal filed by the brewer against Bia Tosha allowing the two to maintain the existing distribution agreement until the case is determined.

“In the interim as the parties having been trading and have a special relationship, we order that the status quo obtaining as at today be maintained pending the hearing and determination of the case,” stated the order delivered by appellate judges Martha Koome, Festus Azangalala and Fatuma Sichale.

Two months ago Bia Tosha moved to court seeking to prevent EABL from appointing other distributors and refund a cumulative Sh38 million in goodwill paid over the last 10 years for exclusive distribution rights; a demand EABL opposes.

The refund of the Sh38 million goodwill has further been made contentious by the fact that British alcoholic manufacturer Diageo, which owns a controlling stake in EABL and has been enjoined to the suit as an interested party, prohibits the payment of goodwill on ethical grounds.

LUCRATIVE ROUTES

Some of the lucrative distribution routes Bia Tosha is fighting to retain include exclusive delivery rights to Kawangware, Dagoretti, Ngong Road, Athi River, South B, Nairobi West, Kenyatta and Lang’ata routes among others.

Bia Tosha further argued the brewer was resorting to intimidation and scare tactics meant to dissuade local distributors from signing distributorship agreements with EABL rivals.

EABL on its part stated that the distributorship contracts in contention were not exclusive to Bia Tosha since other distributors have been contracted to serve the same area and that Bia Tosha did not have the adequate capacity to serve all the 22 areas alone.

In June, the High Court ruled in favour of Bia Tosha, issuing a conservatory order preserving Bia Tosha’s exclusive territory as per an agreement signed in February 2006 between the two parties.

Both parties have been given two weeks to make written submissions to the appeal that will be heard next month.

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