Heineken row with distributors heats up

Three beer distributors have applied for the striking out of three statements of defense lodged by Dutch brewer, Heineken and are now demanding Sh5.3billion as compensation for the irregular cancellation of their distribution contracts early this year.

The three distributors, Kenya’s Maxam Ltd, Uganda’s Modern Lane Ltd and Tanzania’s Olepasu Ltd claim that Heineken and its two local affiliates have flouted the law by filing separate statements beyond the July deadline instead of restructuring their joint defense that was lodged in court on February 17.

They have petitioned the Commercial Court to stop any further deliberations in the dispute until the alleged offending statements-which they claim are vague denials- are expunged from the record.

The matter will be heard by Justice Grace Nzioka on August 30.

Heineken has defended its decision to cancel the distributorship contracts with the three firms operating across East Africa arguing it intends to attract more suppliers to expand its business.

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

Heineken East African Import Company General Manager 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 exclusive three-year contracts and that the firms were still eligible to enter into fresh agreements alongside other interested distributors.

The Dutch brewer maintains that the three distributors did not deserve conservatory orders since they had taken legal action prematurely and breached the dispute resolution mechanism stipulated under their distribution agreements.

The three distributors claimed they have made massive and substantial financial investments that were likely to be wasted once the exclusive contracts were terminated.