Court of Appeal declines to stop EABL lawsuit at the lower court
The Court of Appeal has declined to give orders to a subsidiary of East Africa Breweries, stopping the High Court from proceeding with any suits on beer distributorship.
The beer maker through United Distillers Vintners wanted all the proceedings on the distributorship stopped until the appellant judges make their ruling.
Appellant judges Hellen Okwengu, GBM Kariuki and Fatuma Sichale said judge Louis Onguto should exercise his freedom as he handles the case.
Bia Tosha Ltd in June this year moved to the High Court seeking to prevent EABL from appointing a new distributor.
The company argued that it paid the giant beer maker Sh38 million in goodwill in the last 10 years for exclusive distribution rights in Namanga, Bissil, Kajiado, Kitengela, Athi River, Industrial Area, South B, Nairobi West and Kenyatta market.
Other routes are Lang’ata, Rongai, Kiserian, Magadi, Upper Hill, Ngong Road, Hurlingham, Kawangware, Satellite and Dagoretti.
Bia Tosha was founded by former EABL employee, Peter Burugu, and is one of the brewer’s largest distributors alongside Rwathia, Kamahuha, Veew and Ishano.
The company argues that the brewer has resorted to intimidation and scare tactics meant to dissuade local distributors from signing distributorship agreements with EABL rivals.
In June this year, Bia Tosha signed an agreement with Keroche Breweries, a rival of EABL, to distribute some of its products. Bia Tosha director Ann-Marie Burugu claims, in a signed affidavit, that Diageo has been intimidating them and other suppliers into exclusively distributing its products.
“The firm has waged a war against us after we sought to work with competing alcohol manufacturers,” she said.
Burugu said the scheme has been meant to coerce them into shunning rival manufacturers as part of a scheme to defeat anti-monopoly laws enacted in 2011. She said some of the threatening messages were racist in nature.
Ruling in favour of the distributor, Onguto issued a conservatory saying the company has exclusive territory rights as per an agreement signed in February 2006.
But Diageo, which has some controlling stakes in EABL, opposed the Sh38 million payment for the monopoly of the routes as goodwill on ethical grounds.
UDV Kenya is owned by Diageo PLC which holds 54 per cent shares, while EABL has 46 per cent.
Issuing the orders yesterday, Okwengu said they don’t want to look as if they are interfering with the independence of the lower court.
“Let the High Court take responsibility of its own proceedings,” the judge said.
The ruling will be delivered on November 9.