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Mexican shop owner beats Coca Cola

Posted in the database on Tuesday, November 15th, 2005 @ 09:28:50 MST (1778 views)
from Aljazeera.net  

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Mexico has the highest soft drink consumption in the world

Mexico has imposed its biggest anti-monopoly fines ever, totalling about US$68 million, against Coca Cola and dozens of its distributors and bottlers.

The battle was won by one woman who got tired of being told what to sell at her one-room store in an impoverished Mexico City neighbourhood.

In a country where David-v-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 and another for US$53 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."

Coke denial

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%, 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.

Tough 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 neighbourhood.

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.

Government help

First, she did not 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 4 July, 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.

Similar case

Just a few weeks later, on 12 August, 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 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 will not get any of the money - the fines go to the government - though her victory did not come cheap.

Dark days

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 centres 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 is 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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