Coca-Cola Slapped With $68 Million Anti-Monopoly Fine
By Mark Stevenson
Associated Press
November 15, 2005

MEXICO CITY Mexico has imposed its biggest anti-monopoly fines ever, totaling about US$68 million (euro58 million,) against Coca Cola and dozens of its distributors and bottlers, a battle won by one woman who got tired of being told what to sell at her one-room store in an impoverished Mexico City neighborhood.

In a country where David-vs.-Goliath battles usually end with David getting crushed, Raquel Chavez's victory is no small feat.

The fines one batch amounting to about US$15 million (euro13 million) and another for US$53 million (euro45 million) will not be formally announced until a mandatory appeals period ends, but regulators and a Coca Cola representative confirmed them to The Associated Press.

It is no coincidence that the battle which resulted in some of the highest antitrust fines Coke has ever faced was waged in Mexico, with the highest per-capita soft drink consumption in the world.

Even Chavez, 49, expected to lose when a Coke distributor told her to get rid of Big Cola, an upstart brand that arrived in Mexico recently from Peru, or risk having Coke stop selling to her.

"I told them, 'You can't refuse to sell to me. That's unconstitutional'," Chavez told The Associated Press. "I didn't really know if it was unconstitutional, but I said it anyway."

Coca Cola denied that it has engaged in monopolistic practices.

"We respect the ... decisions," spokesman Charley Sutlive said. "However, we have used the appeal processes open to us to present arguments that our business practices comply with Mexican competition laws, and to demonstrate that our commercial practices are fair."

Coke, whose share of the Mexican soft drink market hovers around 70 percent, is a must-have item for small stores. Chavez still sells it. But she also resented being told what she could sell.

"You may call the shots everywhere else, but I'm the boss in my store," she told the distributor.

She put her three children through college with her 20-hour days at her store, called "La Racha," which means a streak of luck, and takes pride in the business.

In 2003, her customers began asking for "Big Cola," which had begun cutting into Coke's market with lower prices. Coke told her to get rid of the brand, but she refused.

"I am a common citizen who demands her rights, who won't allow herself to be stepped on, that's all," the vigorous, fast-talking Chavez said as she sat on an upturned Coke crate outside her shop.

The shop is tucked into the corner of a one-story brick building in the working-class Iztapalapa neighborhood. Its counters are protected against thieves with steel mesh.

Doing business here is tough. Chavez has been held up at gunpoint or with knives several times since she opened the store in 1992. But nothing had prepared her for the fight with Coca Cola.

First, she didn't know which government agency to turn to. Then, Chavez found the Federal Competition Commission offices on the swanky west side of town. After two months of inaction, she blew up at the anti-monopoly agency.

"I told them, 'What are you good for? What purpose do you serve?'" she said. "Are you here to protect Coke, or to defend us?"

They finally accepted her complaint, investigated it, and found evidence of similar incidents some documented by Big Cola, which later joined the case. Two years later, on July 4, the commission ruled in a closed-door session that 15 Coke bottlers had violated anti-monopoly laws in the case, and fined them about US$15 million.

"I was sure we would lose, because in Mexico for so long, people got away with anything," Chavez said.

Just a few weeks later, on August 12, a similar case that had been held up in hearings for years was suddenly resolved again, with a ruling against Coke, this time against 54 distributors who were ordered to pay about US$1 million (euro860,000) each, the maximum fine allowed.

A copy of one of the rulings obtained by The Associated Press showed that some Coke distributors had threatened to remove company-supplied refrigerators and displays from shops that sold other brands.

They also allegedly shifted competitors' merchandise away from prime locations in some stores, bought it all up and dumped it, or offered Coke merchandise in return for not selling the other brands.

Alfredo Paredes, the communications director for Big Cola's parent company, Ajemex, credits the rulings with "giving us a sense of reassurance ... that these small business owners will no longer be subject to intimidation."

Chavez won't get any of the money the fines go to the government though her victory didn't come cheap.

For three months, she lost all her Coke deliveries. "I thought we were going to go out of business," she said.

Chavez was forced to buy Coke from wholesale centers and lug home dozens of cases in her 1979 Dodge Dart.

"My husband just watched me," she said. "He was mad."

Things have changed since those dark days.

Her husband now waits on customers as Chavez proudly shows off her court papers. Almost on cue, a bright red Coke truck pulls up and smiling, courteous Coke employees unload Chavez's twice-weekly delivery. They say she's a good customer.

"I thought that we would lose this case, and when we did, it was going to be like 'Look, little ant, we crushed you,' because the powerful always win," she said. "Now I feel proud. Maybe now people will start standing up for themselves."

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