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Coke faces new EU probe
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July 21, 1999: 4:07 p.m. ET
Offices raided in antitrust investigation just weeks after product recall
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NEW YORK (CNNfn) - European regulators raided Coca-Cola's offices in Germany, Austria and Denmark this week as part of a probe into whether the world's largest soft drink maker was abusing its dominant position in Europe.
The dawn raids, which Coke confirmed Wednesday, come little more than a month after scores of children got sick after drinking Coke products in Belgium, leading to the biggest recall in the company's history.
A Coca-Cola official told CNNfn that EU officials had made "unannounced visits" to offices across Europe earlier this week and had seized files in Germany, Austria and Denmark. Regulators also contacted Coke bottling partners and retailers.
News of the raids was first reported in the Financial Times, which said the EU was investigating whether Coca-Cola abused its position in the three markets by offering retailers incentives to increase sales volumes, carry a full range of Coke products or stop selling competing drinks.
Such practices are banned in the EU. EU regulators last week fined British Airways $7.8 million for similar practices in what was flagged as a landmark ruling against market leaders.
EU officials also last week raided the offices of Interbrew, the Belgian-based brewer of Stella Artois, to investigate claims similar to those leveled against Coca-Cola.
Analysts said that while the probe was still at an early stage, it could not have come at a worse time for Coke, which is still reeling from disastrous attempts to limit the fallout from the recall.
Marty Romm, beverage analyst at CSFB in New York, noted that Coke has faced similar probes in the United States. "(After) the product recalls in Belgium, Coke stands out there as a bit of a target," he said. "It certainly appears that there is a grudge being held by the authorities."
Millions of Coke drinks were pulled from shelves across Europe last month after scores of children in Belgium became ill. The fallout from the health scare hurt earnings at Coca-Cola Co. (KO) and its biggest bottler, Coca-Cola Enterprises (CCE), as well as its bottling affiliate in Europe.
The Coca-Cola official said the company was cooperating with the EU investigation and that it believed it was in full compliance with the letter and spirit of European competition laws.
European Commission officials were unavailable to comment.
Coca-Cola has already clashed with outgoing EU competition commissioner Karel Van Miert after failing to notify his office of plans to acquire the non-U.S. assets of Cadbury-Schweppes. Coke had to sharply scale back the assets it was buying after objections from regulators in Europe.
Investors took little notice and Coca-Cola stock rose 7/16 at 64-1/8 late Wednesday. 
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