updated 10/19/2004 10:43:08 AM ET 2004-10-19T14:43:08

The European Union reached a settlement Tuesday of its long-running antitrust case against The Coca-Cola Co. under which the world’s biggest soft drink company agreed to change sales practices that helped it win roughly half of the market in Europe.

EU Competition Commissioner Mario Monti said that commitments presented personally by Coca-Cola chief executive Neville Isdell in Brussels were “sufficient for a settlement decision, which will close a five-year probe.”

The changes include an end to exclusivity arrangements with stores or restaurants and allowing rival drinks into Coke-branded coolers, Monti said. The aim is to let consumers to choose what to buy “on the basis of price and personal preferences, rather than pick up a Coca-Cola product because it’s the only one on offer.”

The deal allows Atlanta-based Coke to avoid a fine and potentially years of continued legal wrangling. It would likely take effect next spring, after being translated and published in the EU’s official journal for a consultation period.

The settlement decision, a new tool in the EU’s antitrust arsenal, makes the commitments the company agrees to legally binding and enforceable in national courts. A fine could be imposed later if Coke breached the terms.

The case was sparked by a complaint from PepsiCo Inc. in the 1990s that Coke’s distribution deals in Europe unfairly restricted access for competing products to store shelves and coolers.

Coke has roughly half the European market, compared with about 10 percent for Pepsi. In the United States, Coke’s lead over Pepsi is smaller.

In morning trading on the New York Stock Exchange, Coca-Cola shares were up 5 cents at $39.29 while PepsiCo shares were up 34 cents at $49.33.

Under the deal, Coke will scrap all rebates that require retailers to buy the same amount or more of Coke products each time. It also will no longer require that a customer who wants to buy best-selling regular Coke or Fanta Orange also take less-popular brands, or offer rebates if they do or reserve shelf space for them.

It also will allow rivals to occupy 20 percent of the space inside its coolers, if its coolers are the only ones in the store.

Monti, who was keen to close the case before his five-year term expires this month, received an offer from the Coke last August and last month was testing the market’s reaction — one of the final steps in settlement negotiations.

Talks broke down last spring between another U.S. titan, Microsoft Corp., and EU regulators. The EU then fined Microsoft a record $600 million and drew up a list of demands that the software giant now is fighting in court.

In the Coke case, Monti is using a new legal tool that came into effect with new antitrust regulations in May.

So-called settlement decisions give his office the power to accept a settlement and make it legally binding, enabling Coke’s main rivals, including the Purchase, N.Y.-based PepsiCo, to sue for any violations in national courts.

After the draft compromise is published in the EU’s official journal, there is a one-month period for comments from Coke’s competitors or other interested parties which will then be reviewed by the commission.

Little change is expected as regulators had already sought industry input beforehand, and publishing the text signals they believe the deal is satisfactory.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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