A local distributor has been awarded Sh1.7 billion by High Court as compensation for loss of business and special damages after Dutch brewer Heineken was found guilty of unlawfully terminating its contract.
Judge James Makau awarded Ma’am Company Limited Sh1,799,978,868 loss of business after its distribution agreement was terminated .
The judge ruled that termination of the contract dated May 21, 2013 by Heineken East Africa Company Limited and Heineken International B.V was unlawful, irregular, unprocedural and therefore null and void.
“A declaration is issued that the Kenyan distribution agreement between the plaintiff and the defendants is in full force and effect as per the terms and conditions set therein,” the judge ruled.
Maxam sued the two international beer companies for terminating their agreement without reason.
Heineken International was also directed to take accounts in respect of loss of profits occasioned to the distributor by reason of reduced volumes of sales as well as reduced profit margins from September 2017 until the date of the judgement.
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Judge Makau further ordered the renewal of contracts for the distribution Company.
Maxam Company claimed that pricing model imposed on it by Heineken without consultation are exploitative, oppressive and unfair.
Makau declared the conduct of Heineken International of offering lower market prices to a distributor of the Heineken Larger Beer, approving higher market prices on the same products and reducing their approved margins is discriminatory and is against the Constitution.
The judge added that the actions of Heineken have infringed on the distributor rights as protected by Article 19 of the Constitution.
The two international companies in response argued that the decision to cancel the distributorship was because they intended to attract more suppliers to expand business.
The beer manufacturers claimed the distributor was not entitled to any explanation and that failure by the local firm to register and have the agreement stamped was contrary to the provisions of Stamp Duty Act.
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