EC fines major firms in French beer cartel case
Dutch beer giant Heineken €2.5 million for colluding to control the
wholesale beer market in France.
The EC fined Danone €1.5 million and Heineken €1 million in a case that dates back to 1996. It is alleged that although no plan was ever put into action, both companies colluded to establish equilibrium between their integrated beer distribution networks and limit the acquisition costs of drinks wholesalers.
Danone - through its former brewery Brasseries Kronenbourg - then controlled 40 percent of the French market while Heineken controlled 30 per cent.
The alleged collusion followed an acquisition war that lead to an inflation of the acquisition costs of such wholesalers. The armistice agreement aimed at bringing a rapid end to the rising costs of acquiring the drinks wholesalers, and at balancing the integrated distribution networks of the parties concerned.
The EC claims that this clearly appears from an internal note of 22 March 1996 of the Heineken group, in which the chief executive of Heineken France writes to the board of Heineken.
"Yesterday we have reached agreement with Danone to put an end to the stupid and costly acquisition war," he wrote. "We share the objective that between our two groups equilibrium must exist according to a general rule that none of the two is dominant in the horeca (hotel, restaurant and café) market."
In order to reach these aims, the EC claims that both parties agreed on a temporary acquisition stop, the balancing of the total volume of beer distributed through the integrated network of each party and the balancing of the volume of beer brands distributed by each party on behalf of the other party.
However, the agreement was never implemented, and the EC took this into consideration in establishing the amount of the fine.
Heineken said yesterday that it would study the detail of the decision in full in order to determine its next steps. Heineken has until early December 2004 to decide whether it will appeal against the decision.
The brewer emphasised that the amount of the fine imposed confirms that the alleged infringement was of an incidental nature and that discussions had not lead to any implemented agreement.
This is not the first time that the Commission has fined companies for alleged participation in cartels within the beer industry. In December 2001, the EC fined several companies a total of over €91 million for participating in two secret cartels on the Belgian beer market between 1993 and 1998.
The infringements included market sharing, price fixing and information exchange.
"This is the first commission prohibition decision in a series of cartel cases in the beer sector," said competition commissioner Mario Monti at the time.
"It involves major market players. One of the extraordinary features of this case is the personal involvement of Interbrew's, Alken Maes' and Danone's top managers."
The Commission also fined three Luxembourg brewers: Brasserie Nationale-Bofferding, Brasserie de Wiltz and Brasserie Battin a total of € 448,000 for their participation in a market sharing cartel affecting the Luxembourg horeca sector. A fourth company, Brasserie de Luxembourg (a subsidiary of Interbrew), escaped any fine because it disclosed the cartel to the Commission.
