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WEEKLY NEWS - MAY 12, 2008

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Diageo loses parallel import fine challenge

Emma Barraclough, London

UK drinks group Diageo has failed to persuade a court in Bulgaria to overturn a fine imposed on it by the country’s competition watchdog after it tried to stop a local parallel trading company from selling cut-price whisky and liqueurs

On April 23, the Supreme Administrative Court of Bulgaria ruled that the claims of Diageo Brands and subsidiaries Justerini and Brooks Limited and R and A Bailey & Co against a 2006 decision by the Commission for the Protection of Competition were unfounded.

The Bulgarian competition watchdog had fined the companies Lev600,000 ($476,000) for trying to stop local parallel trading company BeGeIn from selling cheap alcohol imported into the country without the permission of the British drinks maker.

BeGeIn, which supplies parallel imported alcohol, cigarettes and perfumes to supermarkets, wholesalers and hotels, complained to the Commission for the Protection of Competition that Diageo and some of its subsidiaries had breached competition rules by trying to prevent it from trading their products.

Georgi Yordanov, BeGeIn's manager and president of Bulgaria's parallel importers association NAPIB , told Managing IP in an email that the Supreme Administrative Court's decision is a "victory for free commerce, which ultimately constitutes a victory of the consumers, as the same goods are offered at competitive prices, which is how the Competition Protection Committee understands the meaning of 'parallel import', which is necessary and beneficial for the market".

Yordanov said that the resolution is final and cannot be appealed.

Since the Competition Protection Committee made its original decision, Bulgaria has become a member of the EU, which means that many more products are allowed to be imported into the country legitimately.

Diageo did not return calls before press time.