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SAB Miller passes ‘Go’ again in Mexico monopoly battle

08-Aug-2013

Picture Credit: Rich Brooks/Flickr
Picture Credit: Rich Brooks/Flickr

A Mexican Federal court has agreed to hear SAB Miller’s appeal against a July competition commission ruling over alleged monopolistic activities by Heineken and AB InBev subsidiaries.

UK-based brewer SAB immediately expressed its dissatisfaction with the Federal Trade Commission (CFC) resolution after its publication on July 11.

This will remain in affect while the court considers the brewer’s suit against the practices of Cuauhtemoc Moctezuma (owned by Heineken) and Grupo Modelo (AB InBev).

Armando Valenzuela, MD of its subsidiary Miller Trading Company in Mexico, said late Tuesday:“This appeal is an important first step in the legal process that will hopefully open the Mexican beer market to genuine competition and give Mexican consumers the variety and choice that is available in other markets.”

‘Inadequate and undefined commitments’

He added: “Miller believes the settlement resolution failed to truly address the monopolistic activities of the two dominant brewers due to the inadequate and undefined nature of the commitments.

“The commitments made by both brewers are limited by several significant exclusions, which still make it possible to deny access to a majority of retail sales and to large and important regions."

The CFC allowed exclusivity deals to remain without change in many cases, SAB said, in C-stores, large-format accounts, hotels, stadiums, fairs, bars and nightclubs – where the bulk of beer is sold.

“The limited impact of the settlement commitments will result in the continued suppression of free competition and severely restrict consumer choice.”

Heineken subsidiary holds key Oxxo account

The July 11 ruling saw Grupo Modelo and Cuauhtemoc Moctezuma (CM) outline a range of commitments agreed with the CFC, although existing contracts with customers will remain in place until they expire.

Both brewers made similar pledges. For instance, under the July 11 ruling CM committed to allowing craft brewers (up to 100,000 hectoliters/year) to sell products in the on-trade through its ‘clients’.

It will also limit ‘preferential supply agreements’ (the deals SAB takes issue with) to no more than 25% of points of sale, and will gradually cut the number down to 20% and limit the duration of deals.

However, CM’s pledges do not cover present or future relationships with C-stores (including key player Oxxo* which has 11,000+ stores), the brewer’s affiliates, hotel chains and sponsored events.

*Mexican Coke franchise bottler FEMSA took a 20% stake in Heineken in April 2010, in exchange for 100% control of the former’s beer arm FEMSA Cerveza, which has an exclusive supply deal with Oxxo running until June 2020.