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Mexico Slaps Record Fine on Coca-Cola

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Mexico Slaps Record Fine on Coca-Cola

Business

Mexico Slaps Record Fine on Coca-Cola

Mexico Slaps Record Fine on Coca-Cola

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Mexico imposes its biggest anti-monopoly fine ever, about $68 million, against Coca-Cola Export Corp. and dozens of its distributors and bottlers. The case originated from a woman who fought back against being told what to sell at her one-room store in an impoverished Mexico City neighborhood.

MICHELE NORRIS, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.

It's the biggest fine ever imposed in Mexico for anti-competitive business practices. A Coca-Cola subsidiary and dozens of its distributors and bottlers have been hit for $68 million. It's the result of a battle with one woman, a woman in a poor neighborhood. NPR's Lourdes Garcia-Navarro has the story of a shopkeeper who took on one of the biggest companies in the world and won.

LOURDES GARCIA-NAVARRO reporting:

The one-room shop isn't much to look at. It's tucked away in the corner of a ramshackle collection of stalls in a poor neighborhood in Mexico City. The storefront is covered in a metal grill to keep thieves out. It's an unlikely starting point for a story that culminated in $68 million worth of fines. The woman behind it is Raquel Chavez, a forthright 49-year-old mother of three. In 2003, she began stocking a new Peruvian brand of cheaper cola called Big Cola.

Ms. RAQUEL CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: She says, `I started to sell Big Cola, but Coke representatives came around and told me at first, very politely, that they would give me two bottles of Coke for every Big Cola if I stopped selling that brand. I always told them no.' She says that the local Coke distributors began to play hardball. They stopped delivering Coke products to her shop.

Ms. CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: She says they replied, `You want to see that we can do whatever we want?' `Coca-Cola has so many lawyers,' she says, `and so much money that no one can do anything to it.'

Coke products have around 70 percent of the market here. Mexico's president is a former Coca-Cola executive. This is a country that has the highest consumption of soft drinks per capita in the world.

Ms. CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: She says, `If a store doesn't sell Coca-Cola, it's condemned to failure, to ruin. That's why Coca-Cola has been able to dominate everyone,' she says. Her husband begged her to give in. She asked people in the neighborhood to boycott Coke products in protest, but she says no one supported her. Her sales went south as people went elsewhere. In order to keep her shop afloat, she bought Coke retail, lugging it in her 1970 station wagon to her store in the middle of the night.

Ms. CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: She says, `The reason I didn't give in was because of pride and anger. For me, it would have been a defeat because in my store,' she says, `I can sell whatever I want.' She finally took her complaint to the Federal Competition Commission. After several visits and no action, she'd had enough.

Ms. CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: `I told them, "What are you guys here for?"' she says. `"I'm beginning to think you're defending Coca-Cola. They step on us, and no one defends us."' It took several months, but they finally investigated her complaint, which led to fines of $15 million against a group of Coke bottlers. A few weeks later a similar case against Coke brought by Pepsi was resolved with $54 million worth of fines levied against a group of Coke distributors. Both cases are under appeal.

A spokesman for Coca-Cola would not speak on tape but issued this statement on the cases to NPR. It reads, in part: `We have used the appeal process to present arguments that our business practices comply with Mexican competition laws and to demonstrate that our commercial practices are fair and promote a free competitive environment.'

Raquel Chavez will not receive any money from her victory.

Ms. CHAVEZ: (Spanish spoken)

GARCIA-NAVARRO: She says, `This is a message to everyone, to the big guys who are strong, that they need to let the little ones grow and to the little ones, who have to learn to defend their rights because if they don't do it, no one will do it for them.' She says she did it on principle and for her customers, who can now buy whatever they want from her store. Coke and Big Cola are on her shelves side by side. Lourdes Garcia-Navarro, NPR News, Mexico City.

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