Heineken ordered to pay Kenyan distributor Ksh.1.7B in damages

Heineken East Africa Import Company Limited has suffered a blow after the High Court in Nairobi on Tuesday directed the brewer to pay Maxam Limited over Ksh.1.7 billion in a distribution row.

In the ruling, the court noted that Heineken is liable to compensate the plaintiff for its breach of the clause No. 26 of their agreement.

Justice James Makau directed the Dutch brewer to pay Ksh.1,799,978,868 as special damages for loss of business after Heineken terminated Maxam’s distribution agreement.

“I find the plaintiff has demonstrated that the defendants acted in breach of the contract,” ruled the court.

The court further declared that Heineken’s conduct of offering lower market prices to other distributors and approving higher prices to Maxam on the same products thereby arbitrarily reducing their approved margins is discriminatory.

“A declaration be and is hereby issued that the Kenyan Distributors Agreement dated May 21, 2013 between the plaintiff and the first defendant is in full force and effect as per the terms and conditions set out therein,” read the ruling.

The judge noted that there was no basis at all to appoint additional distributors and deprive Maxam supplies of Heineken beer products.

“The agreement has always been renewed and the same is still in force every year since May 27, 2016 and the same is still in full force and effective,” added the court.

Maxam, through lawyer Phillip Nyachoti, had argued that Heineken’s actions infringed on their rights as protected by Article 19 of the Constitution.

The firm accused the international beer company of blatantly going ahead to acquire its key account customers as sub distributors contrary to an order stopping the same.

The defendant however argued that the decision to cancel the distributorship contract with the firm was on the basis that it intends to attract more suppliers to expand its business.

Maxam had sued Heineken East Africa Company Limited and Heineken International B.V.