HEINEKEN SLAPPED WITH OVER SH1.7 BILLION COSTS FOR TERMINATING DISTRIBUTORSHIP DEAL.

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Maxam limited lawyer Philip Nyachoti.PHOTO BY S.A.N.

BY SAM ALFAN.

International beer brewer Heineken has been ordered to pay a distributor Maxam limited over 1.7 million special damages for breach for breach of agreement.

Justice James Makau ordered Heineken East Africa Import Company Limited and Heineken International B.V. to pay Sh1,799,978,868 to the company for terminating distributorship deal.

He also issued order restraining Heineken East Africa Import Company Limited and Heineken International B.V. from terminating the distribution agreement dated May 21, 2013.

Maxam Limited entered the deal for distribution of the Heineken larger beer brand in Kenya until termination three years ago. And in the decision, the court also restrained the two companies from appointing any other distribution of the beer in Kenya, contrary to the terms and conditions of the agreement.

The court declared notice of termination dated January 27, 2016 Heineken International B.V. against Maxam limited as unlawful, irregular, null and void.

“A declaration is hereby issued that the Kenyan distribution agreement dated May 21, 2013 between Maxam limited and Heineken East Africa Import Company Limited is in full force and effect as per the terms and conditions set out,” ruled Makau.

The court also declared that the conduct of the companies, offering lower market prices to other distributors of Heineken larger beer, approving higher market prices to the Maxam Limited on the same products and arbitrarily reducing the Maxam limited approved margins is discriminatory and offends the provisions of article 27 (2) of the constitution.

Justice Makau also declared the pricing models imposed on the Maxam limited by the two companies without the Maxam prior consultation or express consent and which models were issued subsequent to the court order of August 28, 2017 are exploitive, impressive, unfair, and null and void.

Then then Justice Joseph Onguto restrained Heineken International, Heineken Brouwerijen and Heineken East African Import Company (HEAIC) from interfering with the firm’s operations to pave way for the adjudication of the case.

Mazam Ltd, and its sister companies-Uganda’s Modern Lane Ltd and Tanzania’s Olepasu Ltd-have applied for the striking out of three statements of defence filed by the Dutch multinational and its two local affiliates and is seeking Sh5.3billion compensation for the purported cancellation of the contracts last year.

The Judge directed the defendants, through lawyer Gitau Singh to filed their joint statement of defence within seven days. The aggrieved local firm, represented by lawyer Philip Nyachoti, will have a right of reply before the parties are heard on November 6.

Heineken has justified its decision to cancel the distributorship contracts with the three firms operating across East Africa on the basis that it intends to attract more suppliers to expand its business. One of the directors of the aggrieved firms, Ngugi Kiuna, filed the commercial dispute on February 5, last year and secured an injunction issued by Justice Eric Ogola suspending any adverse action on the contracts until the dispute is resolved.

The beer manufacturer claims the three distributors are not entitled to any explanation since the contracts were unequivocal that each of the contracted distributors could be compensated with €450,000 (Sh51 million) once the business relationship was severed.

The General Manager of Heineken East African Import Company (HEAIC), Uche Unigwe, said in court papers the three distributors were formally informed on December 23, 2014, of the parent company’s decision to terminate the exclusivity of the three-year contracts and that the firms were still eligible to enter into fresh agreements alongside other interested distributors.

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