Howdy, hope y’all are hanging in there alright during crunch time and I wish you all the best with finals.
Part of my executive duties with the LSS is to attend every AMS Council meeting this school year. Per tradition, each AMS Council meeting includes a fun fact segment about UBC. Recently, our Archivist and Clerk of Council delivered a little piece of campus history on the UBC Coke deal. To be clear, I’m not talking about dope, Bolivian marching powder, or any other euphemism for the drug, cocaine, but rather the three-way contract between Coca-Cola, UBC and the AMS in 1995 that gave the brand the exclusive right to sell cold beverage products on campus for ten years. That means no Pepsi, 7-Up, Doctor Pepper, only Dasani bottled water, along with Fanta, Sprite, and other subsidiary Coke products. In return the University got about $850,000 a year and the AMS $130,000. This was a highly controversial agreement from the outset for manifold reasons, not the least of which was a confidentiality clause in the contract that barred the university and the society from sharing its details with the public. When the terms of the contract finally saw the light of day in 2001 after lengthy legal efforts were made to file a Freedom of Information request, it revealed a two-year extension clause under which Coke would continue to enjoy exclusive rights to the UBC market without paying a cent if a sales threshold on Coca-Cola products had not been met. As luck would have it, UBC didn’t even come close to selling enough Coke to our students, so Coke got its free two years.
Moreover, there had been growing anti-corporate sentiments among university students at the time, making the student body leery about the deal from the start. There were other objections still to the Coke deal. Some folks thought Coca-Cola’s business practices nationally and elsewhere in the world, such as in Colombia and India, were unethical. Some people also didn’t like the excessive restriction of choice; they wanted to be able to drink Pepsi or Orange Crush or other brands of water. Or perhaps they just wanted to drink good old fashioned tap water from a water fountain, but around this time many fountains around campus had systematically vanished under mysterious circumstances.
To me, this business deal resounds of what Joel Bakan coins the “moral lack” of corporate capitalism —specifically, that “the new corporation emerged as a strategy to protect capital from democracy’s threat to its production and power”. The democratic voice in this case is the outcry from the student body against the university entering into the Coke deal. While it is unsurprising that Coca-Cola would initiate such an elusive contract with the university, as a corporation’s overarching mandate is to create wealth for its equity holders ever since the turn of the twentieth century, it is somewhat ironic that the university would entertain such a deal. Historically, universities were granted the privilege of incorporation in order to better confer a public benefit on behalf of the state —that is, higher education and research. It seems that once given the powers of incorporation, even government apparatuses like universities could be moved to prioritize profit over the other-regarding behaviours that they are designed to fulfill. The aftermath of the Coke deal was laden with disrepute for the university and heavy scrutiny from the student body, which led to AMS Council’s staunch rejection of a proposal to extend the contract, an introduction of internal policy prohibiting the society from entering into exclusive cold beverage agreements, and a revision of its Code to allow for Ethical Review Committees to look into any subsequent contracts involving the society.
This business dealing is yet another instantiation of the aphorism that corporate leaders could not be trusted to protect and promote public interests and a sobering reminder that the ‘Greed is Good’ ethos of corporate capitalism engenders a social and economic reality wherein even universities, as creatures of the state tasked with furthering a public good, could act in ways contrary to the interests of their primary stakeholders: students. The Coke Deal raises a number of ethical issues and general questions about corporate law for me. For one, what exactly constitutes the corporate personhood of a university? While the university has its own official set of shareholders, managers, and board of directors, it should be noted that it is funded predominantly by the government and individual user fees. And on account of that, should the interests and protestations of its users not amount to something in the decision-making process? What is the university’s response when there is tension between user preferences and the interests of their business partners? UBC as a university is a very different commercial entity than the Coca-Cola company. Whereas the latter derives its income through customers who opt to purchase their goods on their own accord, universities derive their income from the tuitions of students who must accept the policies and business decisions of the university wholesale. Learning about the Coke Deal inclines me to agree with Bakan on the necessity of stricter corporate regulation. Since originally universities had a telos of advancing some predefined social good, I think it is in the better interest of society that universities be held to a more rigorous ethical standard than that of other corporations with ordinary commercial interests.
https://ubyssey.ca/news/how-coca-cola-got-near-exclusive-access/
Joel Bakan, “Reflection: Corporate Capitalism’s Moral Lack”
Oh, that kind of Coke.
I was expecting something more scandalous, ha!