Govít warns Bralirwa over abuse of market leadership
The government has told the country’s largest beverage maker, Bralirwa, to respect its market leadership position and open space for fair competition rather than stifle its competitors.
The warning was issued yesterday by the Minister of Trade and Industry, Francois Kanimba, during a tour by senior government officials of Bralirwa’s Kigali plant.
The tour was headed by the Prime Minister, Dr Pierre Damien Habumuremyi, and was comprised of ministers and other top government officials.
Early in January this year, Bralirwa raised eyebrows when it suddenly increased the price of its soft drinks from Rwf250 to Rwf300, something that had not happened since 2008.
Prices of the company’s five beer brands have also changed several times.
“When Bralirwa suddenly increases prices say by 5 percent or 10 percent, it affects the provision of services in the economy and may cause inflation, simply because Bralirwa is a market leader,” Kanimba said.
“The government wonders whether Bralirwa increases prices just because of high costs of production or because there is a margin in the market that they feel they must maximize as market leaders.”
He added that although there was a period when government set the price for Bralirwa products, that era is long gone and the country is a free market economy where prices are set by forces of demand and supply.
“We received a lot of complaints, particularly from Skol, criticising Bralirwa for abusing its position as the market leader, and several distributors confirmed these complaints. As a government, we intend to protect the economy by ensuring that competition is free and fair,” Kanimba added.
Skol is another locally-based beer manufacturing company.
“We understand that for being a monopoly for over 50 years, Bralirwa developed a competitive edge over other emerging breweries because it has a low cost of production. We, therefore, expect Bralirwa to churn competition rather than to stifle it.”
The Managing Director of Bralirwa, Jonathan N. Hall, reiterated that the company does not support anti-competition tendencies and upholds professional practices.
“We compete fairly and have not in any way abused our position as market leaders. However, we listen to advice and improve all the time,” Hall said.
Bralirwa is the largest taxpayer for the past 10 years, contributing approximately 11 percent of the country’s entire tax basket.
“We are committed to supporting Rwandan farmers and producers, but unfortunately the supply chain and quality is low. We buy all our maize from Minimex, purchase all our crates from Rwanda Plastic Industries, import all our sugar because of the poor quality here and Rwanda does not produce malt, which we import from Egypt,” Hall said
The Prime Minister said the government appreciates the role Bralirwa has played and will support it and create a better environment for businesses.
Bralirwa is 75 percent owned by Heineken Group and 25 percent owned by the public through the Rwanda stock exchange market.
In 2010, Bralirwa’s net profits soared toRwf52.8 billion from Rwf45.5 billion collected the previous year.
Contact email: ivan.mugisha[at]newtimes.co.rw