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Setback for KBL in war over bottle with Keroche

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The High Court in Nairobi dismissed an application by Kenya Breweries Limited (KBL) seeking orders to have parts of its rival Keroche Breweries’ petition struck out. Justice Fred Ochieng’ yesterday blocked a bid KBL and East Africa Breweries Limited (EABL) to have some paragraphs of Keroche’s response in a bottle case pitying the brewers struck out on the grounds that they are unfair and scandalous.

In the ruling, Judge Ochieng said that there was no conclusive demonstration by KBL that either the said “offensive paragraphs” in the defense or the counterclaim were bound to cause delay in the hearing and determination of this case. “If the lines of the defense are so weak and vain as KBL believes them to be, the same will not withstand scrutiny at the trial,” said Ochieng’.

Justice Ochieng’ added that neither the defense nor the counterclaim were so plainly lacking in merit that deserved to be struck out.

The suit was filed by EABL in March 22, 2016 against Keroche Breweries seeking to bar it from using the standard brown bottles ostensibly engrossed with EABL mark.

Keroche Breweries counterclaimed alleging several restrictive trade practices against EABL, among them misuse of intellectual property. Keroche quoted extensively from the Hansard of past events in which EABL was accused of holding out Castle Breweries Ltd from the market.

EABL is said to have been holding a dominant position in the beer market and soon after Keroche made its response it applied to have the responses struck out.

Tusker is KBL's flagship beer brand.
Tusker is KBL’s flagship beer brand.

EABL contested that Keroche had failed to provide prove indicating that they are dominant in the market. EABL added that the court did not have jurisdiction to grant any relief other than the statutory relief provided under the Competition Act.

The company claimed that the said paragraphs contained issues that are not in dispute and could not assist the court to arrive at fair and just determination of the real issues between the parties. It was contested that the said “offensive paragraphs” were prejudicial and oppressive to KBL and that they constituted an abuse of the court process.

Keroche had claimed that EABL was trying to repeat the same scheme it applied on Castle Brewery Kenya Ltd, which was then owned by South African Breweries (now SAB Miller) in 2002.

SAB exited the Kenyan market in a swap deal that saw EABL also exit the Tanzanian market where it operated under Kibo Breweries in Moshi. “The particulars of the restrictive trade practices as outlined in the ‘offensive paragraphs’ by Keroche are immaterial to the present main suit,” EABL said.

Keroche argued that striking out of a pleading or any part of a pleading should be exercised sparingly and only in clear circumstances where the pleading does not disclose a reasonable and justifiable action or defense.

It said the contentious paragraphs have raised legitimate fundamental issues in relation to the alleged trademarks infringement EABL claims and they should therefore be allowed to ventilate those issues. “It is a notorious fact that EABL engages in unfair trade practices both historically and continuously,” said Keroche.

Keroche claimed the purported claim by KBL, EABL, Protection Logistics Limited and the Director department of weights and measures in the main suit for violation of an intellectual property in the brown bottles is a culmination of pre-determined unfair trade practices.

EABL on the other hand has denied working with state organs to have its rival company Keroche Breweries wiped from the beer market.

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