The Common Market for Eastern and Southern Africa (COMESA) Competition Commission has dealt a significant blow to the operating model of Uganda Breweries Limited (UBL), a subsidiary of the global giant Diageo Plc, under Felicite Nson’s leadership as Managing Director.
Diageo has agreed to pay a $750,000 (approximately Shs2.5 Billion) settlement to the CCC for engaging in anti-competitive business practices in Uganda, Eswatini, and Zambia, a ruling that specifically calls out and dismantles key elements of UBL’s distribution network in Uganda.
The agreement was signed in London, UK, on September 30, 2025, by James Edmunds, Diageo’s General Counsel, and Dr. Willard Mwemba, the Commission’s Director and Chief Executive Officer.
The fine, though settled without an admission of liability, marks the end of an era of highly restrictive trade practices within the region for the beverage powerhouse.
The CCC ruled that the practices violated the COMESA Competition Regulations, which outlaw agreements that prevent or distort competition within COMESA.
“These arrangements frustrated regional trade integration and ran counter to the objectives of the COMESA Treaty,” the ruling reads in part.
The CCC’s four-year investigation revealed that Diageo’s distribution and production contracts contained clauses that “frustrated regional trade integration and ran counter to the objectives of the COMESA Treaty.”
Contractual Shackles Broken for UBL
The ruling directly impacts Uganda Breweries Limited by mandating the immediate removal of three restrictive clauses that the CCC found to be severely distorting market dynamics:
Severe Territorial Restrictions
The CCC was particularly critical of UBL’s contracts in Uganda. These clauses restricted distributors from selling outside their designated zones and, more crucially, barred them from accessing potential cross-border markets within neighbouring COMESA countries. The removal of this restriction now forces UBL to contend with intra-brand competition as its distributors gain the freedom to trade across borders.
Minimum Resale Price Maintenance
Contracts were found to allow Diageo (and, by extension, UBL) to influence and potentially fix retail prices. By eliminating this clause, UBL’s distributors gain the autonomy to set their own prices, which is expected to inject price competition into the market. This shift will require UBL to achieve greater efficiency in its cost structure to maintain profitability.
Single-Branding Obligations
The agreements compelled distributors to sell only UBL/Diageo products. The removal of this clause opens up UBL’s extensive distribution network to competitor products, significantly intensifying inter-brand competition in the Ugandan beverage sector.
Paradigm Shift for UBL’s Market Strategy
Experts contend that the Shs2.5 billion fine is less significant than the fundamental restructuring required of UBL’s business operations. The company must now pivot from a market strategy built on territorial protection and price control to one based on performance, open competition, and brand strength.
As a result of this development, UBL must quickly revamp its distributor incentive model. The previous protection is gone; the focus must now shift to providing superior value and logistics support to retain distributors who are now free to carry rivals’ products.
Compliance and Monitoring
As part of the settlement, Diageo has committed to providing the COMESA Competition Commission with compliance reports for three years. This places UBL’s distribution practices under continuous regional regulatory scrutiny, ensuring the restrictive clauses are never reintroduced.
Empowerment of Distributors
The ruling empowers UBL’s distributors by granting them the freedom to pursue export opportunities and determine their own pricing strategies. This move, while challenging for UBL’s top-down control, promotes regional economic integration and benefits consumers through fairer competition and potentially wider availability.
In essence, the fine acts as a catalyst, compelling Uganda Breweries Limited to align its operational conduct with the principles of free trade and competition that underpin the COMESA treaty.