FTC Approves Coca-Cola’s Acquisition of its Largest North American Bottler

On September 27, the FTC approved Coca-Cola Company's $12.3 billion acquisition of the North American operations of Coca-Cola Enterprises Inc., its largest North American bottler. When the agreement was announced, Coca-Cola already owned about 34 percent of Coca-Cola Enterprises. To resolve antitrust concerns raised by the acquisition, Coca-Cola agreed to restrict its access to confidential competitive business information of rival Dr Pepper Snapple Group, which also distributes Dr Pepper Snapple carbonated soft drinks.
According to the FTC's complaint, Coca-Cola and Dr Pepper Snapple are direct competitors in the highly concentrated and difficult-to-enter markets for branded soft drink concentrate and branded carbonated soft drinks sold in stores. Prior to the announced deal, Dr Pepper Snapple provided commercially sensitive information about its marketing plans to Coca-Cola Enterprises to help it perform its bottler and distribution functions. According to the complaint, Coca-Cola's access to this information could harm consumers by eliminating competition between Coca-Cola and Dr Pepper Snapple.

The FTC's proposed settlement order is designed to remedy these potential problems by requiring Coca-Cola to set up a “firewall” so the sensitive information cannot be accessed by anyone at Coca-Cola who may be in a position to use it against Dr Pepper Snapple. Under the settlement with the FTC, Coca-Cola will set up a “firewall” to ensure that its 100% ownership of the bottling company does not give certain Coca-Cola employees access to commercially sensitive confidential Dr Pepper Snapple marketing information and brand plans. In a complaint filed with the settlement, the FTC charged that access to this information likely would have harmed competition in the U.S. markets for carbonated soft drinks. This settlement agreement is very similar to the one that Pepsi entered into on February 26, 2010 when it acquired its two largest bottlers and distributors. The proposed Coca-Cola order will expire in 20 years.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com