UNIVERSITY OF SARAJEVO

SCHOOL OF ECONOMICS AND BUSINESS IN SARAJEVO

Academic Year 2015/ 2016

"CONTROVERSIES OF COCA COLA BUSINESS

PRACTICES IN REGARD TO MONOPOLIZATION
Case study

Sarajevo, April 2016.

UNIVERSITY OF SARAJEVO
SCHOOL OF ECONOMICS AND BUSINESS IN SARAJEVO

Academic Year 2013/ 2014

"CONTROVERSIES OF COCA COLA BUSINESS

PRACTICES IN REGARD TO MONOPOLIZATION
Case study

Mentor: Ph.D.

Student: Meldisa

Sarajevo, April 2016.

Abstract

Criticism of Coca-Cola has arisen from various groups, concerning a variety of issues,
including health effects, environmental issues, and business practices. The Coca-Cola
Company, its subsidiaries and products have been subject to sustained criticism by both
consumer groups and watchdogs, particularly since the early 2000s.

Key word: Coca Cola, criticism, group, company, global, business, consumers,
watchdogs, low, courth;

Contents
Abstract............................................................................................................................3
Products............................................................................................................................6
Caffeine.........................................................................................................................6
Bottles............................................................................................................................6
Health effects.................................................................................................................6
Pesticide contamination.................................................................................................7
Vitamin Water lawsuit...................................................................................................9
Coca-Cola and Catalan language...................................................................................9
Mislabelling.................................................................................................................11
Environmental issues.....................................................................................................11
Water use.....................................................................................................................11
Packaging....................................................................................................................12
Animal testing.............................................................................................................12
Economic business practices.........................................................................................13
Monopolization............................................................................................................13
"Channel stuffing" settlement......................................................................................14
Investments and operations in apartheid South Africa................................................14
Employee issues.............................................................................................................16
Racial discrimination...................................................................................................16
Sinaltrainal v. Coca-Cola Co.......................................................................................16
Death Squads in Colombia..........................................................................................17
Conclusion......................................................................................................................19
Literature.......................................................................................................................21
Books...........................................................................................................................21
Internet sources............................................................................................................22

Appendix........................................................................................................................23
Pictures and tabeles.....................................................................................................23

Products
Caffeine
Main article: United States v. Forty Barrels & Twenty Kegs of Coca-Cola. In 1916,
there was a federal suit under which the government unsuccessfully attempted to force
The Coca-Cola Company to remove caffeine from its products.

Bottles
Main article: Escola v. Coca-Cola Bottling Co. In 1944, Escola was a waitress in a
restaurant. She was putting away glass bottles of Coca-Cola when one of the bottles
spontaneously exploded in her hand. She successfully argued that the company was
liable.

Health effects
A link has been shown between long-term regular cola intake and osteoporosis in older
women (but not men).1 This was thought to be due to the presence of phosphoric acid,
and the risk was found to be the same for caffeinated and noncaffeinated colas, as well
as the same for diet and sugared colas.

1 Tucker KL, Morita K, Qiao N, Hannan MT, Cupples LA, and Kiel DP (October 1,
2006). "Colas, but not other carbonated beverages, are associated with low bone mineral
density in older women: The Framingham Osteoporosis Study" (PDF). American
Journal of Clinical Nutrition 84 (4): 336342. PMID 17023723. Retrieved 2008-04-21.

In 2016, a Framingham Heart Study published by the American Heart Association's

journal Circulation showed daily drinkers of fizzy drinks which contain sugar, suffered
a 30% increase in fat linked to diabetes and heart disease which the researchers said
reinforced existing advice to minimise sugar sweetened drinks.2

Pesticide contamination
In 2003, the Centre for Science and Environment (CSE), 3a non-governmental
organisation in New Delhi, said aerated waters produced by soft drinks manufacturers in
India, including multinational giants PepsiCo and Coca-Cola, contained toxins
including lindane, DDT, malathion and chlorpyrifos pesticides that can contribute to
cancer and a breakdown of the immune system. Tested products included Coke, Pepsi,
and several other soft drinks (7Up, Mirinda, Fanta, Thums Up, Limca, Sprite), many
produced by The Coca-Cola Company.
CSE found that the Indian produced Pepsi's soft drink products had 36 times the level of
pesticide residues permitted under European Union regulations; Coca-Cola's 30 times.
CSE said it had tested the same products in the US and found no such residues.
Coca-Cola and PepsiCo angrily denied allegations that their products manufactured in
India contained toxin levels far above the norms permitted in the developed world.
David Cox, Coke's Hong Kong-based communications director for Asia, accused Sunita
2 Pepsico India Holdings v. State of Kerala, WP(C) Nos. 22140 & 22141 of 2006; Civil
Appeal Nos. 819 & 820 of 2007 pending with the Supreme Court. See also the
Rajasthan case of Hindustan Coca-Cola Beverages v. Santosh Mittal, Civil Appeal Nos.
19651973 of 2008 (2013-10-03)

3 Business Standard (2003-10-29). "Coke sales fall 11% on pesticide controversy".

Business-standard.com. Retrieved 2012-11-03.

Narain, CSE's director, of "brandjacking" using Coke's brand name to draw attention
to her campaign against pesticides. Narain defended CSE's actions by describing them
as a natural follow-up to a previous study it did on bottled water.4
In 2004, an Indian parliamentary committee backed up CSE's findings, and a
government-appointed committee was tasked with developing the world's first pesticide
standards for soft drinks. Coke and PepsiCo oppose the move, arguing that lab tests
aren't reliable enough to detect minute traces of pesticides in complex drinks like soda.
The Coca-Cola Company has responded that its plants filter water to remove potential
contaminants and that its products are tested for pesticides and must meet minimum
health standards before they are distributed.5
Coca-Cola had registered an 11 percent drop in sales after the pesticide allegations were
made in 2003.6
As of 2005, Coke and Pepsi together hold 95% market share of soft-drink sales in
India.7
In 2006, the Indian state of Kerala banned the sale and production of Coca-Cola, along
with other soft drinks, due to concerns of high levels of pesticide residue. On Friday,

4 Ibidem.

5 Tucker KL, Morita K, Qiao N, Hannan MT, Cupples LA, and Kiel DP (October 1,
2006). "Colas, but not other carbonated beverages, are associated with low bone mineral
density in older women: The Framingham Osteoporosis Study" (PDF). American
Journal of Clinical Nutrition 84 (4): 336342. PMID 17023723. Retrieved 2008-04-21.

6 Pepsico India Holdings v. State of Kerala, WP(C) Nos. 22140 & 22141 of 2006; Civil
Appeal Nos. 819 & 820 of 2007 pending with the Supreme Court. See also the
Rajasthan case of Hindustan Coca-Cola Beverages v. Santosh Mittal, Civil Appeal Nos.
19651973 of 2008 (2013-10-03)

September 22, 2006, the High Court in Kerala overturned the Kerala ban, ruling that
only the federal government can ban food products.

Vitamin Water lawsuit

In January 2009, the US consumer group the Center for Science in the Public
Interest filed a class-action lawsuit against Coca-Cola.8 The lawsuit was in regard to
claims made, along with the company's flavors, of Vitamin Water. Claims say that the
33 grams of sugar are more harmful than the vitamins and other additives are helpful.
Coca-Cola insists the suit is "ridiculous."9

7 Pepsico India Holdings v. State of Kerala, WP(C) Nos. 22140 & 22141 of 2006; Civil
Appeal Nos. 819 & 820 of 2007 pending with the Supreme Court. See also the
Rajasthan case of Hindustan Coca-Cola Beverages v. Santosh Mittal, Civil Appeal Nos.
19651973 of 2008 (2013-10-03)

8 Lucy Clarke-Billings (12 January 2016). "One can of fizzy drink a day increases risk
of diabetes and heart disease". Daily Telegraph. Retrieved 12 January 2016.

9 Centre for Science and Environment, Pesticides in coke Down to Earth, Magazine,
Pesticides in coke

Coca-Cola and Catalan language

In Catalonia, there has been controversy regarding Coca Cola's refusal to print its labels
in Catalan. On 12 December 1993, the Platform for the Catalan Language (Plataforma
per la Llengua) managed to make a world record by bringing together more than 15,000
empty Coca-Cola cans in Barcelonas central square Plaa de Catalunya and using them
to build a giant sign that read "Lets label in Catalan". At the time, the organisation
adopted the motto: "The Coca-Cola label in 135 languages around the world, but not in
Catalan?".10

Figure 1. 40,000

Coca-Cola cans on May 31, 2014, Barcelona

10 Ibidem.

10

Figure 2. RepteCocacola CAT

On May 31, 2014 Plataforma per la Llengua, recalling the act of the 12th of December,
1993, collected over 40,000 Coca-Cola cans for making a mosaic with the letters
"Etiqueteu en Catal!" (Label in Catalan!) in the heart of Barcelona, Catalonia, at Plaa
de Catalunya to demand the company label in Catalan after more than 20 years of
lawsuits.

Mislabelling
Main article: POM Wonderful LLC v. Coca-Cola Co. In 2014, POM
Wonderful successfully argued that Coca-Cola's Minute Maid division mislabelled a
product as a pomegranate and blueberry juice, when it was made 99.4% from apple and
grape juices. POM Wonderful said this labelling caused unfair loss of sales of its own
pomegranate and blueberry juice.

Environmental issues
Water use
In March 2004, local officials in Kerala shut down a $16 million Coke bottling plant
blamed for a drastic decline in both quantity and quality of water available to local
farmers and villagers.11

11 Ibidem.

11

In April 2005, the Kerala High Court rejected water use claims, noting that wells there
continued to dry up last summer, months after the local Coke plant stopped operating.
Further, a scientific study requested by the court found that while the plant had
"aggravated the water scarcity situation," the "most significant factor" was a lack of
rainfall.
The case has been appealed and a decision is pending.12 Coca-Cola has set up a page to
rebut these charges at cokefacts.org that was once owned by its detractors.13

Packaging
Packaging used in Coca-Cola's products has a significant environmental impact but the
company strongly opposes attempts to introduce mechanisms such as container deposit
legislation.
In 2013, the company was criticized in Australia for undertaking litigation that led to the
invalidation of a bottle recycling deposit.14
12 Tucker KL, Morita K, Qiao N, Hannan MT, Cupples LA, and Kiel DP (October 1,
2006). "Colas, but not other carbonated beverages, are associated with low bone mineral
density in older women: The Framingham Osteoporosis Study" (PDF). American
Journal of Clinical Nutrition 84 (4): 336342. PMID 17023723. Retrieved 2008-04-21.

13 Coca-Cola website (2006). "THE COCA-COLA COMPANY ADDRESSES

ALLEGATIONS MADE ABOUT OUR BUSINESS IN INDIA". Retrieved June 12,
2006.

14 Business Standard (2003-10-29). "Coke sales fall 11% on pesticide controversy". Businessstandard.com. Retrieved 2012-11-03.

12

Animal testing
In 2007, the Coca-Cola Company announced it would no longer conduct or directly
fund laboratory experiments on animals unless required by law to do so. The company's
announcement came after PETA criticized the company for funding invasive
experiments on animals including one study in which experimenters cut into the face of
chimpanzees to study the animals' nerve impulses used in the perception of sweet taste.
Some experimenters have criticized PETA's campaign against Coca-Cola and other
companies claiming that their work would be undermined if they lost corporate
funding.15

Economic business practices

Monopolization
In 2000, a United States federal judge dismissed an antitrust lawsuit filed
by PepsiCo Inc. accusing Coca-Cola Co. of monopolizing the market for fountaindispensed soft drinks in the United States.16

15 Lucy Clarke-Billings (12 January 2016). "One can of fizzy drink a day increases risk
of diabetes and heart disease". Daily Telegraph. Retrieved 12 January 2016.

16 Centre for Science and Environment, Pesticides in coke Down to Earth, Magazine,
Pesticides in coke

13

In June 2005, Coca-Cola in Europe formally agreed to end deals with shops and bars to
stock its drinks exclusively after a European Union investigation found its business
methods stifled competition.
In November 2005, Coca-Cola's Mexican unit - Coca-Cola Export Corporation - and a
number of its distributors and bottlers were fined $68 million for unfair commercial
practices. Coca-Cola is appealing the case.

"Channel stuffing" settlement

Coca-Cola Co, on July 7, 2008 compromised to pay $137.5 million to settle an October
2000 shareholder lawsuit. Coca-Cola was charged in a U.S. District Court for the
Northern District of Georgia, with "forcing some bottlers to purchase hundreds of
millions of dollars of unnecessary beverage concentrate to make its sales seem higher."
Institutional investors, led by Carpenters Health & Welfare Fund of Philadelphia &
Vicinity, accused Coca-Cola of "channel stuffing," or artificial inflation of Coca-Cola's
results which gave investors a false picture of the company's health. The settlement
applies to Coca-Cola common stock owners from Oct 21, 1999 to March 6, 2000.

Investments and operations in apartheid South Africa

Coca-Cola entered South Africa in 1938 and, after the beginning of the official white
South African government's policy of apartheid or "separate development" beginning in
1948, the company grew rapidly. By the 1980s at the height of racial oppression, with

14

90% of the market, Coke dominated the soft-drink industry with sales in the hundreds of
millions of dollars, accounting for 5% of the parent company's global market. Coke
employed 4,500 workers, operating under the racially segregated housing, workplace,
and wages, and was one of the largest employers in the country.17
In 1982 in South Africa, black workers asked the community to boycott Coke and called
two work stoppages until the company agreed to recognize and bargain with their union,
raise its workers' low wages significantly, and share information on who controls their
pension fund.
As a result of Coke's economic support of white South Africa and its apartheid system,
in the 1980s, it became a major target of organizers across the country against U.S. and
corporate economic support for apartheid in the U.S. Boycotts then spread across the
country to many universities including Tennessee State, Penn State, and Compton
College in California, which established a "Coke Free Campus." Demonstrations were
held by the Georgia Coalition and the AFSC at Coca-Cola's Atlanta headquarters.
In South Africa, in 1986, the Coca-Cola response was to donate US$10 million to a fund
to support improvements of housing and education for black South Africans and to
announce "...plans to sell its 30% share of a major bottler and a 55% share of a canning
operation within six to nine months."18 (The company's assets there were estimated at
US$60 million, their annual sales were circa US$260 million, and with 4,300 workers
one of the largest U.S. employers in South Africa.) However, the movement in the U.S.
demanded full divestiture and did not accept the company's offer to sell a major portion
of the holdings to a South African firm.19
After democratic elections that produced Mandela's majority rule government, Pepsi
sought to re-enter the South African market. In fact, "Coke never truly left the country,
leading to overwhelming dominance through the rest of the 20th century. Pepsi adhered
17 Ibidem.

18 Centre for Science and Environment, Pesticides in coke Down to Earth, Magazine,
Pesticides in coke

15

to different social imperatives and suffered exceptionally low market shares as a

result."20 Indeed, in the late 2000s, Coke's market share of the soft drink market in South
Africa was estimated at 95% and Pepsi's at 2%.

Employee issues
Racial discrimination
In November 2000, Coca-Cola agreed to pay $192.5 million to settle a class
action racial discrimination lawsuit and promised to change the way it manages,
promotes and treats minority employees in the US. In 2003, protesters at Coca-Cola's
annual meeting claimed that black people remained underrepresented in top
management at the company, were paid less than white employees and fired more
often. In 2004, Luke Visconti, a co-founder of Diversity Inc., which rates companies on
their diversity efforts, said: "Because of the settlement decree, Coca-Cola was forced to
put in management practices that have put the company in the top 10 for diversity."21

19 Coca-Cola website (2006). "THE COCA-COLA COMPANY ADDRESSES

ALLEGATIONS MADE ABOUT OUR BUSINESS IN INDIA". Retrieved June 12,
2006.

20 Business Standard (2003-10-29). "Coke sales fall 11% on pesticide controversy".

Business-standard.com. Retrieved 2012-11-03.

21 Ibidem.

16

Sinaltrainal v. Coca-Cola Co.

Main article: Sinaltrainal v. Coca-Cola Co. In 2001, the Sinaltrainal trade union filed a
suit against Coca-Cola in a Miami district court. The union alleged that Coca-Cola
bottling partners, Bebidas y Alimentos and Panamco, assisted paramilitaries in
murdering several union members. The court decided charges would be considered
against the partners but not Coca-Cola itself. On September 4, 2006, Judge Martinez
dismissed the remaining claims against the two bottlers.

Death Squads in Colombia

Colombia has long been the most dangerous country in the world to organize a union.
Since 1986, roughly 4000 Colombian trade unionists have been murdered. In 2000,
three of every five trade unionists killed in the world were Colombian. The vast
majority of these murders have been carried out by right-wing paramilitary groups (aka
death squads) on an ideological mission to destroy the labor movement. These groups
often work in collaboration with the official U.S.- supported Colombian military, and in
some instances with managers at plants producing for multinational corporations. In the
case of Coca-Cola, according to numerous credible reports, the company and its
business partners have turned a blind eye to, financially supported, and actively
colluded with paramilitary groups in efforts to destroy workers attempts to organize
unions and bargain collectively.

17

Since 1989, eight union leaders from Coca-Cola plants have been murdered by
paramilitary forces. Dozens of other workers have been intimidated, kidnapped,
or tortured.
In Carepa, members of the paramilitary murdered union leader Isidro Gil in
broad daylight inside his factorys gates. They returned the next day and forced
all of the plants workers to resign from their union by signing documents on
Coca-Cola letterhead.
The most recent murder attempt occurred on August 22, 2003, when two men
riding motorcycles fired shots at Juan Carlos Galvis, a worker leader at CocaColas Barrancabermeja plant.
There is substantial evidence that managers of several bottling plants have
ordered assaults to occur and made regular payments to leaders of the
paramilitary groups carrying out the attacks.
These ongoing abuses have taken their toll on Coca-Cola workers efforts to organize.
Their union, SINALTRAINAL, has suffered a dramatic loss in membership, as worker
leaders are intimidated or forced into hiding. SINALTRAINAL has appealed for
solidarity and allies in the U.S. labor and social justice movements have answered their
call. The United Steelworkers and the International Labor Rights Fund have filed a
lawsuit against Coca-Cola on behalf of the union and victims families in U.S. federal
court. Other unions including the Teamsters and many community groups have
launched public campaigns targeting Coke.

18

Conclusion
The delegation found both the quantity and the nature of Coca-Cola workers allegations
shocking and compelling. It seems indisputable that Coke workers have been
systematically persecuted for their union activity. It seems equally evident that the
company has allowed if no itself orchestrated the human rights violations of its workers,
and it has benefited economically from those violations, which have severely weakened
the workers union and their bargaining power.
In the face of this evidence, Coca-Colas continued insistence that it bears no
responsibility whatsoever for the terror campaigns against its workers is highly
disturbing, as is its complete failure to investigate company ties to the paramilitaries.
The delegation has engaged in an earnest dialogue with the company on these issues for
almost a year now, and has yet to receive any documentation backing up its denials of
complicity in the situation. The delegation will continue to press for the specific
documents it has been promised and to exhort the company to take urgently needed
action to address the human rights crisis faced by its Colombian workforce.
Specifically, the delegation reiterates its calls for:
1. Dropping all retaliatory criminal charges against its employees. The delegation
is concerned about the chilling effects of a company such as Coca-Cola filing
retaliatory charges against workers who have used the legal system to address
their grievances.
2. A public statement from Coca-Cola supporting international labor rights in
Colombia, denouncing anti-union violence, and initiating a long-overdue
investigation of workers allegations. The delegation believes that Coca-Colas
apparent refusal to investigate charges of such a serious nature against their
employees appears to undermine their support for human and labor rights. Such
a statement and investigation would serve to bolster international consumer
confidence in the companys corporate behavior.
3. An independent human rights commission. An independent human rights
commission is necessary to evaluate all allegations and plant conditions to
determine credible threats and identify potential means to protect both workers
rights and verify Coca-Colas standing as a good global citizen. In order to
19

maintain credibility and objectivity, the commission should be made up of

equally participating partners from Coca-Cola, SINALTRAINAL and other
relevant labor representatives and internally recognized human rights experts.
The delegation will continue its efforts to persuade Coca-Cola to take these
urgently needed steps and to demonstrate that it will not tolerate profits
subsidized by terror.
The delegation also urges all people of conscience to join in these efforts. We call on
consumers to contact the company and add their voice to the call for corporate
responsibility. We call on shareholders to exercise their power of ownership in the
company. We call on churches, student organizations, community groups and civic
associations to get involved. We issue a special call to unions to stand in solidarity with
their brothers and sisters in Colombia being persecuted for their exercise of
internationally recognized labor rights. And we call on government bodies, representing
all of these constituencies, to stand up for human rights and for the ideals of American
democracy, which guarantee freedom of association. Together as stakeholders in CocaCola, all of us must challenge this company, the symbol of American enterprise
throughout the world, to end its complicity in the persecution of Colombian workers.

20

Literature
Books
1. Tucker KL, Morita K, Qiao N, Hannan MT, Cupples LA, and Kiel DP (October
1, 2006). "Colas, but not other carbonated beverages, are associated with low
bone mineral density in older women: The Framingham Osteoporosis
Study" (PDF). American Journal of Clinical Nutrition 84 (4): 336
342. PMID 17023723. Retrieved 2008-04-21.
2. Lucy Clarke-Billings (12 January 2016). "One can of fizzy drink a day increases
risk of diabetes and heart disease". Daily Telegraph. Retrieved 12 January 2016.
3. Centre for Science and Environment, Pesticides in coke Down to Earth,
Magazine, Pesticides in coke
4. India Resource Center - How a Global Web of Activists Gives Coke Problems in
India
5. Coca-Cola website (2006). "THE COCA-COLA COMPANY ADDRESSES
ALLEGATIONS MADE ABOUT OUR BUSINESS IN INDIA". Retrieved June
12, 2006.
6. Business Standard (2003-10-29). "Coke sales fall 11% on pesticide
controversy". Business-standard.com. Retrieved 2012-11-03.
7. Pepsico India Holdings v. State of Kerala, WP(C) Nos. 22140 & 22141 of 2006;
Civil Appeal Nos. 819 & 820 of 2007 pending with the Supreme Court. See also
the Rajasthan case of Hindustan Coca-Cola Beverages v. Santosh Mittal, Civil
Appeal Nos. 19651973 of 2008 (2013-10-03)
8. Thomas, V.M. Indian Court Overturns Coke, Pepsi Ban "Coke Sued for
Fraudulent Claims on Obesity-Promoting "VitaminWater"". Center for Science
in the Public Interest. January 15, 2009. Retrieved July 29, 2012.
9. Hindustan Coca-Cola Beverages v. Perumatty Grama Panchayat,W.A. No. 2125
of 2003 and W.A. No. 215 of 2004, 2005 (2) KLT 554. See also the case
of Pepsico India Holdings v. State of Kerala,WP(C) Nos. 27334 of 2003 &
27736 of 2004, 2007 (2) KLT 835 concerning Kanjikode
10. Goodman, Brenda (31 May 2007). "Pepsi and Coke Agree to Stop Financing
Research That Uses Animals". New York Times. Retrieved10 February 2015.
11. "Coca-Cola in South Africa," The Africa Fund, July
1986,http://africanactivist.msu.edu/document_metadata.php?objectid=32-130133A

21

12. "Coca-Cola Acts to Cut All Ties With S. Africa," Los Angeles Times, September
18, 1986, http://articles.latimes.com/1986-09-18/news/mn-11241_1_south-africa
13. "African Activist Archive". Africanactivist.msu.edu. Retrieved2012-11-03.
14. "Coke vs. Pepsi: The Cola Wars in South Africa during The Anti-Apartheid Era,"
by John Kirby Spivey, M.A. Thesis, Georgia State University Department of
History, 2009.http://digitalarchive.gsu.edu/history_theses/35
15. "Coke vs Pepsi in SA - Investment Insights". Moneyweb. Retrieved2012-11-03.
16. Ben White (2002-04-18). "Black Coca-Cola Workers Still Angry". Washington
Post.
17. Annys Shin (2004-06-10). "Foundation Helps Sodexho Counter Discrimination
Suit". Washington Post.

Internet sources
1. http://www.cokefacts.org/
2. "Coca-Cola: Things Go Worse for Workers." in "The Struggle for Justice in
South Africa... and here at home," Washington, D.C., Washington Office on
Africa Education Fund, February 1984, p.6
http://africanactivist.msu.edu/document_metadata.php?objectid=32-130-1000

22

Appendix
Pictures and tabeles
Figure 1. 40,000 Coca-Cola cans on May 31, 2014, Barcelona10
Figure 2. RepteCocacola CAT.........................................................................................10

23