SMC ordered to pay Asia Brewery P130M for damages

MANILA, Philippines - The Marikina Regional Trial court this week ordered food and beverage giant San Miguel Corp. (SMC) to pay over P130-million in damages to rival Asia Brewery, Inc. (ABI). The court found SMC guilty of unfair trade acts for hoarding and removing from circulation over a million bottles and thousands of its competitor's plastic crates. In a 47-page decision dated November 18, 2008, Judge Alice C. Gutierrez of Marikina RTC's Branch 263 (formerly of Pasig City) said SMC must compensate ABI for the profits it lost as a result of SMC's order. "By withdrawing the ABI bottles from circulation, SMC effectively disrupted ABI's marketing and distribution system and deprived it of the profits it could have gained if it [was] able to re-use the bottles and shells in the normal course of trade," Gutierrez said in her decision. The judge said that since bottles and shells are "essential parts" of ABI's production, marketing and distribution systems, SMC's acts caused its rival to invest more and incur more costs to replace the missing items. A court-sanctioned raid of SMC's three warehouses in 1997 yielded over 1.6 million bottles of ABI's Beer na Beer, Carslberg, Manila Beer, Colt 45, Lone Star and Budweiser in various sizes, some of which were still unopened. The sheriff also seized 128,679 ABI red plastic shells, 468 of which were repainted green with a stamp of the San Miguel logo in white. The inventory excludes "unquantifiable" broken ABI bottles which the sheriff discovered inside another SMC warehouse in Valenzuela City. ABI filed the civil case for damages and recovery of possession against San Miguel in 1997 after surveillance showed that SMC was keeping ABI's bottles and shells in its San Fernando, Pampanga brewing facility. Hidden from public view inside SMC's plant, the ABI crates and bottles were stacked 20 cases high, eight cases wide and 250 yards long. During the trial, ABI presented seven witnesses which included four former SMC sales personnel. The former SMC employees testified that they were aware of a plan by SMC's top management to "seek total annihilation and destruction of the enemy [ABI]" through various schemes which include "buy-outs" or "pull-outs" of ABI products from various dealers. The witnesses also recalled a 1985 convention in Baguio City where top SMC executives launched project R.A.M.B.O. which stands for "Rip Apart Manila Beer Operation", in reference to Manila Beer, one of ABI's earliest products. They said the buy-out and pull-out operations were most intensive from 1991 to 1992. Judge Gutierrez concluded that SMC committed unfair trade acts and practices alleged in ABI's complaint. "The court is convinced that plaintiff [ABI]… was able to establish that defendant [SMC] engaged in systematic schemes to pull out the beer products of plaintiff from the stores and other trade outlets," the judge said. In throwing out SMC's defense that the withdrawal of ABI's bottles was merely accidental due to the alleged confusing similarity between SMC's Pale Pilsen and ABI's Beer na Beer bottles, Gutierrez said that other ABI products with vastly different bottles like Carlsberg, Stag, Budweiser and Colt 45 were likewise found in SMC's possession. She said the supposed bottle swapping agreement between the two companies, which was allegedly terminated by ABI could not be used by SMC as an excuse. Gutierrez said ABI had good reason to terminate the bottle swapping agreement since it was being used by SMC to disguise its unfair trade practices. Besides, the judge said that while the agreement covers only bottles, the court sheriff found thousands of ABI crates in SMC's warehouses. - GMANews.TV