updated 6/22/2005 7:59:57 AM ET 2005-06-22T11:59:57

The European Union said Wednesday it reached a legally binding agreement with the Coca-Cola Co. that allows the world’s largest soft-drink maker to escape a fine but puts restrictions on its sales practices in Europe.

Under the deal, Atlanta-based Coca-Cola will not be able to strike exclusive arrangements with stores and cafes in Europe that stop them from serving rival brands, or offer them rebates for buying more of its bands.

The company also will not be allowed to force retailers to stock its less popular brands alongside Coke. And it will have to allow retailers issued coolers by Coca-Cola to stock them with rival brands as well as Coca-Cola products.

“This decision will benefit consumers by improving competition in the markets for carbonated soft drinks in Europe,” said EU Competition Commissioner Neelie Kroes. “Thanks to the Commission’s decision, consumers will be able to choose from a larger range of fizzy drinks at competitive prices.”

If Coca-Cola violates the agreement it could face fines of up to 10 percent of global sales, the EU warned.

The agreement, which runs until the end of 2010, formalizes commitments presented by Coca-Cola Chief Executive Neville Isdell in talks with EU regulators in October.

“We welcome today’s decision, which marks the conclusion of a six-year investigation,” Isdell said in a statement Wednesday. “We now have clarity regarding the application of European competition rules to our commercial practices.”

The EU has been investigating Coke since the late 1990s, when it received a complaint from PepsiCo Inc. that its rival’s distribution deals in Europe unfairly restricted access for competing products to store shelves, coolers and soda fountains.

Coca-Cola has roughly half the European market, compared with about 10 percent for Purchase, N.Y.-based Pepsi. In the United States, Coke’s lead over Pepsi is smaller.

The so-called 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.

The deal with Coke is only the second time the EU has used the procedure. The first was a case involving television rights for screening soccer in Germany.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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