SR3bn Pepsi deal probed

SR3bn Pepsi deal probed
Updated 05 February 2014

SR3bn Pepsi deal probed

SR3bn Pepsi deal probed

The competition council of the Ministry of Commerce and Industry says the SR3 billion PepsiCo franchise deal by the National Bottling Company, a division of Ahmad Hamad Al-Gosaibi & Brothers, is illegal and violates rules of fair competition and antitrust practices.
The company violated regulations because it did not notify the council or get permission to sign a deal. It also did not consider the negative economic consequences of the agreement, the council said.
The council said it would probe the legality of the deal, which saw Al-Jomaih Bottling & Can Making Plants, also a representative of PepsiCo in the Kingdom, buy the franchise for SR3 billion from Al-Gosaibi.
Article 6 of the country's antitrust laws stipulate that firms merging to become a dominant market player should seek permission from the council 60 days before signing any deal.
The other international agents for Pepsi in the Kingdom are the Saudi Industrial Projects Company and Abdul Hadi Al-Qahtani & Sons.
Statistics released in 2010 by the Gulf Organization for Industrial Consulting (GOIC) said the beverage industry in Gulf states has grown rapidly because of increasing demand for bottled mineral water, juices and soft drinks.
Saudi Arabia hosts more than 50 percent of these companies. Saudi investors make up 77 percent of the SR9 billion in investments in Gulf Cooperation Council (GCC) countries. There are 230 beverage companies operating in the GCC.
The role of the competition council in Saudi Arabia is to protect and encourage fair competition and combat monopolistic practices that could harm the market and consumers.