HEINEKEN IRELAND’S alleged breaches of a joint venture agreement have resulted in well over €10 million losses for the Nash drinks company, it has been claimed before the Commercial Court.
The proceedings by Hartside Ltd, an Isle of Man-based company, against Heineken Ireland Ltd, were transferred to the Commercial Court this week by Mr Justice Peter Kelly.
Hartside claims it and Heineken, then named Murphy Brewery Ireland Ltd, entered into a joint venture with several other parties in November 1996 for the acquisition and ownership of Nash Beverages Ltd.
A number of ancillary agreements were also entered into, including a management agreement between Hartside and Heineken and a keg delivery agreement, it is claimed.
Hartside claims the business of the joint venture, including keg delivery and wholesale drinks distribution, was to be conducted under the terms of the joint venture. The intention was to manage the business in accordance with best business practice and to maximise the value of the company, it said.
It is claimed Heineken has breached the terms of the joint venture agreement and the management agreement in taking steps which had, and have, the effect of advancing Heineken’s own interests and depressing the value of NBL and consequently Hartside’s interest in Nash Beverages.
Such steps include Heineken, whether by itself or through its nominees on the board of Nash Beverages or through the Nash Beverages general manager, restricting the company engaging in parallel importing; preventing meaningful reform of the company’s wholesale distribution business; and failing to ensure control systems were put in place to prevent stock fraud and other stock discrepancies.
It is claimed Heineken also passed on unauthorised costs to the Nash company. Heineken is also alleged to have restricted Nash Beverages from sourcing cheaper product via parallel imports which would have increased Nash Beverages’ profits.
It is also alleged Heineken has procured and/or conducted the management of the wholesale distribution business of Nash Beverages in such a way as to needlessly incur losses.
Hartside claims Heineken has failed to achieve lowest cost and best practice costs in, for example, refusing to progress the subcontracting out of Nash Beverages’ logistics and warehousing against advice this would have resulted in very substantial savings for the company.
Heineken has also been supplying its own products to Nash on less favourable terms than to other companies, it is alleged.
In its action, Hartside is seeking orders compelling Heineken to comply with its obligations under the joint venture.
Hartside claims the Nash Beverages business is viable and can flourish if the joint venture is operated as intended.
