A federal consumer protection agency has lost a bid to stop a merger of two companies in the beverage industry after a legal battle of 44 months came to an end last month.

Justices at the Supreme Court`s Cassation Bench ruled that there is no legal basis for the Trade Competition & Consumer Protection Authority (TCCPA) to challenge the merger between the East Africa Bottling Co., bottlers of Coca-Cola, and Ambo Mineral Water S.C., a once state-owned company privatised a few years ago. The Authority sued the two companies after they allegedly declared their merger in January 2017, in the presence of their staff and distributors at an event held at the United Nations Economic Commission for Africa (UNECA).

The Authority claimed that the merger was evidenced by the companies' management agreeing that distributors would carry both their products by deploying the same sales system; the transfer of major administrative employees between the companies; and shared advertisements, logos and letters. Prosecutors from the Authority presented these as material evidence to prove a merger they challenged as illegal. They argued a merger could be validated in written form, conduct or through what they term as the meeting of minds.

It was an assertion the defense contested, claiming that there was no merger between the domestic companies. If there was, it was made between their parent companies, incorporated in Mauritius.

Ambo International Holdings Ltd, registered in Mauritius, has acquired 33pc of the government’s shares in Ambo Mineral Water for 19.7 million dollars, and SABCO and SABMiller Plc have shares in East Africa Bottling. First established in the 1930s as a private company, Ambo was nationalised during the Dergue regime. In 2008, it was partially privatised with stakes being sold to South African brewery SABMiller and Tewodros Ashenafi, a businessman with a background in oil exploration in Ethiopia. At the time, SABMiller owned 51pc of the company, while Tewodros owned 16pc.

The merger between the companies paved the way for Ambo International Holdings to take over 84pc of the company's shares, whose plant is located in Sekele locality, 130Km west of Addis Abeba in Oromia Regional State.

Five years ago, Ambo was valued at an estimated 60 million dollars. With around 460 employees, the company reached an hourly production capacity of 26,000 glass and 10,500 plastic bottles.

Having its jurisdiction over trade disputes, the Authority ruled in August 2017 that the companies were liable for merging without the Authority's acknowledgment and imposed a fine equal to five percent of sales revenues on both companies from the following operation year. In January 2018, lawyers representing the companies appealed before an appellate court, urging the ruling to get reversed and for the fines to be lifted.

The appellate court remanded the case to the lower tribunal, which sustained its former ruling.

The corporate lawyers took the case to the Federal High Court in July 2019. Judges at the High Court overruled the decision in November 2019 in favour of the companies. The judges said they found no sufficient evidence to prove that the companies have merged.