Proof you can beat the real thing

Published on 16/11/2005 01:17

IT WAS a battle between a woman tired of being told what to sell at her one-room shop in an impoverished Mexico City suburb and one of the world's largest corporations.

But this week, contrary to the way things usually work out in Mexico, the big guys lost as the government imposed its largest ever anti-monopoly fines, totalling about $68 million, against Coca-Cola and dozens of its distributors and bottlers.

Even Raquel 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'," Mrs Chavez said. "I didn't really know if it was unconstitutional, but I said it anyway."

Mexico is the world's largest per capita consumer of soft drinks.

Coke, whose share of the Mexican soft drink market hovers at about 70 per cent, is a must-have item for small stores. Mrs 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 shop, called "La Racha," which means a streak of luck, and takes pride in the 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 Mrs Chavez said as she sat on an upturned Coke crate outside her shop.

The shop is tucked into the corner of a one-storey brick building in the working-class Iztapalapa suburb. Its counters are protected against thieves with steel mesh.

Doing business here is tough. Mrs 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.

At first, Mrs Chavez did not know which government agency to turn to. Then she found the Federal Competition Commission offices on the upmarket west side of town. After two months of inaction, she vented her anger 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?"

The commission 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 $15 million.

"I was sure we would lose, because in Mexico for so long, people got away with anything," Mrs Chavez said.

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 $1 million each, the maximum fine allowed.

The fines will not be formally announced until a mandatory appeals period ends, but regulators and a Coca -Cola representative confirmed them.

A copy of one of the rulings 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 shops, bought it all up and dumped it, or offered Coke merchandise in return for not selling the other brands.

Alfredo Paredes, 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".

Mrs Chavez won't get any of the money - the fines go to the government - though her victory didn't come cheap. For three months, she lost all her Coca-Cola deliveries.

"I thought we were going to go out of business," she said. Mrs Chavez was forced to buy Coke from wholesale centres and lug dozens of cases home in her elderly car.

"My husband just watched me," she said, adding that he was angry with her for taking on such an impossible battle.

Things have changed since those dark days. Her husband now waits on customers as Mrs Chavez proudly shows off her court papers. Almost on cue, a bright red Coke truck pulls up and smiling, courteous Coke employees unload Mrs Chavez's twice-weekly delivery. They say she's 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."

Coca-Cola denied that it engaged in monopolistic practices.

"We respect the ... decisions," Charley Sutlive, a spokesman 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."