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Coca-Cola set for EU talks over rebate case

/ Source: Financial Times

Coca-Cola and the European Commission are expected to start talks in the next few weeks to try to resolve the Brussels antitrust case against the group. 

The Commission has been looking into the legality of Coca-Cola's rebates to retailers since 1999, when it carried out an unannounced inspection at the group's European headquarters. 

It has yet to bring charges, although it is planning to act against the company's German operations by next June. 

People on both sides are thought to favor a settlement, but no formal negotiations have yet taken place. "We are always open to dialogue," Coca-Cola said yesterday. 

The company would be keen to avoid formal charges that it has abused a dominant position in the market. Coca-Cola has a troubled recent history in Europe, with two high-profile product recalls, and it is facing pressure in other aspects of its business as it searches for a new chairman and chief executive. 

It is also expected to face tough questions next week at its annual meeting. Warren Buffett's re-election to the board has been challenged by investor groups that claim his ties with the company compromise his ability to serve as an independent director. 

On Wednesday Coca-Cola, which in the US faces two federal investigations into fraudulent business practices, said Deval Patrick, its general counsel, was staying on to the end of the year and not resigning immediately, as had been indicated. 

The European Commission has been looking at rebates for retailers that carry a range of Coca-Cola products and at rewards for displaying drinks prominently. Coca-Cola says its rebates are normal practice and argues that big retailers exercise more power over the sector. It denies it dominates the relevant market. 

The recent Brussels ruling against Microsoft, the software group, has boosted officials' interest in reaching a deal. The Commission does not want to be seen as singling out big U.S. companies for punishment. 

Some Brussels lawyers say Microsoft would have been best advised to have reached a settlement in 2001 after Mario Monti, competition commissioner, vetoed General Electric's $43 billion purchase of Honeywell. 

Philip Lowe, Mr. Monti's top official, would also like to speed up big inquiries of alleged monopolistic practices and free resources for other cases.