Blow to Heineken as court orders the firm to pay distributor Ksh1.8 billion in damages

The High Court in Nairobi on Tuesday, July 30, ordered Heineken East Africa Import company to pay its distributor in Kenya, Maxam Limited, Ksh1.8 billion in damages following a contract agreement row.

Justice James Makau of the Constitutional Court division in his ruling said Heineken East Africa Import Company Limited breached a binding agreement between it and Maxam, Heineken’s official distributor in Kenya.

According to the judge, after Heineken unprocedurally terminated its agreement with Maxam, the distributor lost business, and, therefore, the right thing for Heineken to do, according to Justice Makau, is to compensate Maxam for the loss.

Justice Makau, as a result, directed Heineken to pay Maxam Ksh1, 799, 978, 868 in special damages.

The judge said the complainant convincingly proved that the defendant acted in breach of their contract.

Justice Makau further said Maxam demonstrated that Heineken offered the company’s Large Beer product at higher prices to Maxam and lower prices to other distributors, and, therefore, denying Maxam a chance to make deserved profits.

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

In the court documents, Maxam Limited proved that its contract with Heineken East Africa Import was active, when the beer maker’s East Africa arm breached the agreement.

The firm accused Heineken of “blatantly going ahead to acquire its key account customers as sub-distributors, which was contrary to an order stopping the same”.

In their defence, Heineken had 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.