An arbitration panel ruled that Molson broke its 1985 licencing agreement with Coors when it became 20%-owned by Coors' rival, Miller Brewing Co. of Milwaukee in 1993, without Coors' consent. Molson has been ordered to pay Coors all the profit earned on selling the licenced brands over the past three years and may have to pay other damages related to alleged violations of confidentiality..
However, Molson said in a statement that this decision was unexpected and contrary to its own legal advice. The estimated value of damages is about $28m, based on Molson's $352m operating profit over the past three years, with Coors accounting for about 8% of sales..
Meanwhile, Coors has reached in interim agreement with Molson to allow the Canadian brewer to continue brewing Coors for a while to give Coors a chance to explore other brewing or exporting options which could include shipping Coors in from the U.S..
Copyright October 1996, Crain Communications Inc.