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Brussels, 5 December 2001

The Commission fines brewers in market sharing and price fixing cartels on the Belgian market

The European Commission has today fined several companies a total of over € 91 million for participating in two distinct secret cartels on the Belgian beer market between 1993 and 1998. The infringements included market sharing, price fixing and information exchange. They affected the horeca sector (i.e. hotels, restaurants and cafés) as well as the retail sector (i.e. supermarkets and other food shops), including the sale of private label beers. Competition Commissioner Mario Monti said: "This is the first Commission prohibition decision in a series of cartel cases in the beer sector. 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 at the time. This is a very serious matter. I also take Danone's recidivism very seriously. The Commission's fining policy aims at deterring companies from committing blatant infringements of our competition rules. I hope the companies involved got the message."

In the course of 1999 the European Commission undertook surprise inspections at the premises of Interbrew, Alken-Maes and the Belgian brewers confederation (CBB). These inspections led to an investigation which enabled the Commission to find evidence of two distinct cartels in the Belgian market.

The first cartel involved Interbrew (by far the number one brewer in Belgium with a market share of around 55% and the number two brewer in the world) and Alken-Maes (the number two player in Belgium with a market share of around 15%) as well as its then parent company Danone. This cartel covered a wide range of anticompetitive arrangements in the horeca sector (i.e. sales for away-from-home consumption in hotels, restaurants and cafés) as well as the retail sector (e.g. sales in supermarkets or smaller food shops for consumption at home).

The second cartel concerned specifically the segment of so-called private label beers, i.e. beers which supermarkets order from brewers but sell under their own brand name. Interbrew, Alken-Maes, Haacht and Martens (a brewer whose production consists almost entirely of private label beer) participated in this second cartel.

Total fines were imposed on the companies involved as follows:

  • Interbrew: € 46.487.000(1)

  • Danone/Alken-Maes: € 44.628.000(2)

  • Haacht: € 270.000

  • Martens: € 270.000

1. The cartels

a) The cartel between Interbrew and Danone/Alken-Maes

From early 1993 until the beginning of 1998, the two parties were involved in wide ranging cartel activities on the Belgian beer market. Interbrew used the code name "Université de Lille" or "project Green" for these activities. The cartel activities encompassed a general non-aggression pact and more specifically the limitation of investments and advertising in the horeca sector, the allocation of horeca customers, price-fixing in the retail sector, a new tariff structure to be applied in the horeca sector as well as in the retail sector and finally a detailed monthly information exchange system concerning sales volumes in both sectors.

A striking feature of this cartel is that the CEO's themselves and other top management of the companies regularly met to initiate and monitor the above mentioned arrangements. Another feature worth being mentioned is that Danone, which was Alken Maes' parent company during the relevant period of time, was itself very actively involved in these arrangements.

The cartel took off with a price fixing agreement for the retail sector and an agreed limitation of commercial investments in the horeca sector. An internal Interbrew note from the spring of 1993 showed that Interbrew's and Danone's top management were already considering to enter into a closer cooperation. However, the Interbrew people thought that Danone had more to gain from this. Moreover, they had antitrust concerns.

In May 1994, contacts between the two companies intensified. This was due to a threat from Danone: if Interbrew did not transfer 500.000 hl (roughly 5% share of the Belgian market) to Alken-Maes in the Belgian retail sector, it would make life difficult for Interbrew-France. Evidence of this threat stems from declarations made by former Interbrew representatives but also from an internal Heineken document. This document was found during an inspection at Heineken's premises, concerning another cartel investigation.

The threat eventually led to a "gentlemen's agreement" between the parties at the end of 1994. They committed themselves generally to respect each other's market positions. They further agreed on a number of specific points, including price-fixing in the retail sector, market sharing in the horeca (initially the classic outlets, later on also the national accounts(3)), commercial investments and a new tariff structure in both sectors. In addition, throughout this period the parties exchanged monthly information about their sales volumes in both sectors.

At the beginning of 1998, the parties noted that they had achieved a good deal of their objectives.

b) the private label cartel

In the course of the on-going investigation regarding the cartel between Interbrew and Danone/Alken-Maes, Interbrew informed the Commission about a series of meetings in the period from October 1997 until July 1998 between itself, Alken-Maes, Haacht and Martens concerning the private label beer market in Belgium.

The discussions during these meetings aimed at avoiding a price war and at consolidating the existing allocation of customers. This amounted to a concerted practice within the meaning of Art. 81 EC Treaty. Besides, the parties also agreed to exchange information about their clients in the private label segment.

Interbrew and Alken-Maes took the initiative of organizing the four meetings; However, Haacht and Martens did not merely play a passive role in the concerted practice. Both participated in all meetings and actually exchanged information about sales volumes. Moreover, Martens suggested at one point to invite the Dutch private label beer producers to the meetings.

2. The calculation of the fines

When setting fines, the Commission takes into account the gravity of the infringement, its duration, any aggravating or mitigating circumstances as well as the cooperation of the company. It also takes into account a company's market share in the product market and its overall size. The upper limit of any fine is established at 10% of a company's total annual turnover.

a) The cartel between Interbrew and Danone/Alken-Maes

The Commission considers that the price fixing and market sharing cartel between Interbrew and Danone/Alken-Maes represents a very serious breach of EU competition law. For such a breach, the likely amount of the fines is at least € 20 million. Although Interbrew and Danone are both big, international companies, Interbrew's starting amount for gravity is higher than Danone's, because its market share on the Belgian beer market is substantially larger than Danone's Furthermore, it is a cartel of medium duration (five years). This has led the Commission to increase the basic fines for both companies by almost 50%.

For Danone there are two aggravating factors which lead to a further increase of the fine by 50%.

First, Danone or as it was called at the time Boussois-Souchon-Neuvesel (BSN) - has participated in similar antitrust infringements already twice before (in 1974 and 1984).(4) The circumstance that these infringements occurred in a different sector (flat glass) is irrelevant. It is the nature of the infringement and the identity of the company that matter. Moreover, the Commission notes that for the entire period during which BSN, later Danone, has committed these infringements, the same person acted as CEO of the company and that some flat glass managers at the time were active in Danone's retail business during the period of the beer cartel. The Commission views recidivism as a very serious aggravating circumstance.

The second aggravating circumstance concerns Danone's threat to make Interbrew's life difficult in France if Interbrew did not meet its request to have 500.000 hl of beer transferred to its subsidiary Alken-Maes. As pointed out above, this threat led to an increase of the cartel activity.

As a mitigating circumstance, the Commission recognises that Alken-Maes ended the information exchange with Interbrew. For this a reduction of 10% is granted.

Both parties have co-operated to a certain extent during the investigation by supplying information to the Commission. However, Interbrew's cooperation was more material than that of Danone/Alken-Maes. On this basis, Interbrew is granted a reduction of 30% and Danone/Alken-Maes a reduction of 10%.

b) The private label cartel

Since the cartel was limited to the small private label beer segment in Belgium (roughly 5% of beer consumption in Belgium), the Commission considers the parties' behaviour only as a serious infringement for which the likely amount of the fine is in principle between €1 million and €20 million. The cartel was of a short duration (nine months).

The fact that Interbrew and Alken-Maes took the initiative for these meetings is aggravating for them. This results in an increase of the fine by 30% for both parties.

All parties have co-operated with the Commission during the procedure. Interbrew even disclosed the cartel. Although it blew the whistle, it cannot, however, benefit from full immunity under the Commission's so-called Leniency notice(5) because it was one of the instigators of the cartel. For its co-operation, it is granted a reduction of 50%. The other brewers are granted a reduction of 10% for their co-operation.

Destination of the fines

Companies have three months in which to pay any fine imposed. Fines are accounted into the general budget of the European Union once they have become definitive. The overall EU budget is pre-defined and therefore any unscheduled revenues is be deducted from the contributions made by Member States to the EU budget, ultimately to the benefit of the European tax payer.

Other cases

The Commission is also investigating suspected cartels on beer markets in other European countries. In this context, inspections have taken place between January 2000 and January 2001 in France, the Netherlands, Italy, Denmark and Portugal. At this moment it is impossible to prejudge the outcome or the timing of these investigations.

Please see also IP/01/1740 of today on the decision reached concerning the Luxembourg beer cartel case.

(1) € 45.675.000 for the Cartel with Danone/Alken-Maes and € 812.000 for the private label Cartel.

(2) € 44.043.000 for Danone's and Alken-Maes' participation in the Cartel with Interbrew and €585.000 for Alken-Maes' participation in the private label Cartel.

(3) Typical examples of national accounts are caterers, airports, large cinema complexes.

(4) See Commission decisions of 15 May 1974 (O.J. L 160/1) and 23 July 1984 (O.J. L 212/13).

(5) OJ C 207 of 18 July 1996.

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