Multinational spirits and beer manufacturing company, Diageo Plc has been fined USD 750,000 (KES 96.9 million) by the Common Market for Eastern and Southern Africa (COMESA) competition commission for taking part in anti-competitive business practices across Uganda, Eswatini, Seychelles, and Zambia.
Diageo Plc, a 65% stakeholder in the East African Breweries Limited (EABL Plc) , was reported to have engaged in anti-competitive practices like restrictive distribution agreements, territorial limitations and resale price maintenance, which narrowed competition in the market. The practices were identified in Uganda, Eswatini, Seychelles and Zambia who are all members of COMESA.
An investigation that was initially registered as case No. CCC/ACBP/4/1/2021, was launched in June 2021 after COMESA got complaints about Diageo’s restrictive distribution practices. The investigations went on for years and finally the company’s distribution and production agreements with local partners were found to contain clauses that restricted competition and cross boarder commerce.
From the investigations, the clauses that were highlighted by the commission clearly compromised the principles of free market competition that promote the COMESA treaty and its regulations. The clause on minimum resale price maintenance enabled Diageo to set retail prices charged by distributors. Additionally, the single branding restrictions pushed distributors to sell only Diageo products hence driving out competing brands from accessing the same distribution networks. Moreover, the territorial restrictions, noted in Uganda prohibited distributors from selling outside their designated areas, which consequentially cut them off from other COMESA markets.
COMESA on Diageo’s Unfair Practices
The commission’s ruling was categorically critical of Diageo’s practices in Uganda where its local subsidiary, Uganda Breweries Limited (UBL) was found to have imposed severe territorial restrictions on its distributors. Similar practices were identified in Eswatini, Seychelles, and Zambia, where Diageo’s distribution structures weakened local import substitution and shielded the company’s monopolistic status from competitive pressure.
Diageo defended its actions, arguing that the restrictive clauses were standard commercial safeguards intended to maintain brand integrity, prevent parallel imports and ensure quality control. However, COMESA rejected this justification, highlighting that the distribution arrangements frustrated trade integration and also violated article 16 of the COMESA Competition Regulations, which forbids agreements that prevent competition in the market.
After years of correspondence, the commission issued a statement of concerns in September 2023 giving Diageo an opportunity to respond by October that year. The company initially contested the allegations but later opted for a negotiated settlement. By May 2025, Diageo and the Commission had had entered into discussions that culminated in a commitment agreement, a legal mechanism through which companies admit no guilt but commit to corrective actions.
Under the settlement terms, Diageo agreed to pay USD 750,000 to COMESA in full and final settlement of the investigation. The company also undertook to remove all restrictive clauses from its distribution and production agreements, to notify all its distributors within 30 days that such restrictions were no longer applicable, and to submit regular compliance reports for the next three years.
Impact of COMESA’s Ruling
The commissions ruling exemplifies a significant regulative action that promotes regional trade integration and enhances fair competition in the East African market, setting a standard to multinational corporations operating in the region. It reaffirms COMESA’s readiness to act against conduct that undermines fair trade and regional integration.
Diageo through EABL, remains a dominant force in the East Africa alcoholic beverages industry. The company’s subsidiary Kenya Breweries Limited controls a significant share of the regional beer and spirit market. Following this, the commission’s ruling is therefore expected to have ripple effects across EABL’s regional strategy, potentially prompting a review of how its products are distributed and marketed across borders.
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