Competition Council Imposes 20 Million TND Fine on Leading Beverage Company

The Competition Council, a key player in economic governance, aims to promote initiative and equality of opportunities among businesses and citizens in the economic sphere. Following an ex officio investigation, the Council has decided to impose a 20 million TND fine on a group of companies operating in the carbonated beverage sector, which have been found guilty of abusing their dominant market position.

Although details are scarce, it is likely that the company in question is SFBT, given its dominant position in the market. At first glance, the fine appears substantial. However, it is essential to put it into perspective. The fine represents only 2.4% of SFBT's 2023 revenue and 7.9% of its net profits. From a financial standpoint, the penalty is not severe.

Moreover, the company's liquidity position remains strong, with 83,923 million TND in bank deposits as of 2023, reflecting the excellent financial health of the agro-food giant.

The notification of the fine triggers a three-month deadline for the Minister of Commerce to make a decision. Historically, the Ministry has followed the Council's recommendations in the majority of cases.

While the fine may have some impact on the company's profitability, it is unlikely to be significant. Furthermore, the penalty will be distributed among various subsidiaries, mitigating its effect on the parent company's accounts. With a reported stock of 245,857 million TND, the dividend is secure for shareholders.

We believe that the impact of this fine could be more significant for other listed companies with dominant positions in their respective sectors. This development introduces a new risk factor to be considered in valuation exercises. A story to be continued...