Brussels, 5 December 2001
Commission fines Luxembourg brewers in market sharing cartel
The European Commission today 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 "on-trade" or "horeca" sector (hotels, cafés and restaurants). A fourth company, Brasserie de Luxembourg (a subsidiary of Interbrew), escaped any fine because it disclosed the cartel to the Commission. The brewers agreed to guarantee each other's exclusive purchasing arrangements with horeca customers and took steps to restrict penetration of the Luxembourg horeca sector by foreign brewers. The cartel lasted from October 1985 to February 2000.
Following an investigation begun in February 2000, the European Commission has established that four Luxembourg brewers participated in a market sharing cartel affecting the Luxembourg horeca sector. The companies involved were :
The cartel consisted of a written agreement signed in 1985 by which the parties agreed not to supply beer to any horeca customer (hotels, cafés, restaurants and beer wholesalers) which was tied to another party by an exclusive purchasing agreement or "beer tie". This beer tie guarantee extended to beer ties which were invalid or unenforceable in law, as well as to supply arrangements where a brewer simply invested in a drinks outlet but did not sign an exclusive purchasing contract. It therefore served to protect each party's clientele. The beer tie guarantee was reinforced by a consultation mechanism, obliging the parties to check with each other about the presence of a beer tie before supplying new customers, as well as by financial penalties for non-compliance.
The cartel agreement also contained provisions intended to keep foreign brewers out of the Luxembourg horeca sector. First, there was a common defensive mechanism whereby the parties agreed to consult each other in the event that a foreign brewer attempted to negotiate a supply contract with one of their tied outlets. Priority would then be allocated to one of the parties to attempt to keep the outlet as a customer. If that party succeeded in negotiating a new contract with the outlet, it was obliged to compensate the party which had lost the outlet by transferring an equivalent outlet to him. Other clauses allowed for the exclusion from the cartel of any party which co-operated with a foreign brewer or distributed its beer.
The cartel agreement was signed for an unlimited duration and required the parties to give twelve months written notice to terminate. No party gave notice before Interbrew, the parent company of Brasserie de Luxembourg Mousel-Diekirch, disclosed the cartel to the Commission in February 2000. Interbrew made this disclosure in the context of the Commission's investigation of the Belgian beer cartel case. There was also evidence that parts of the agreement had been implemented until 1998.
The Commission imposed the following fines:
When setting fines, the Commission takes into account the gravity and duration of the infringement, any aggravating or attenuating circumstances, as well as the co-operation of the company with its investigation. It also takes account of a company's position in the relevant sector, as well the company's overall size. The upper limit of any fine is 10% of a company's total turnover.
The cartel was a form of market sharing and included measures to impede trade from other Member States into Luxembourg. Market sharing is amongst the most serious infringements of the EU's anti-trust rules. However, the cartel was limited to the relatively small Luxembourg on-trade and it was not implemented in full. The Commission therefore categorised it as a serious infringement.
In setting the basic amount for gravity, the Commission took into account that Bofferding, Wiltz and Battin are small or medium-sized companies whose activities are concentrated in Luxembourg and whose total turnover is correspondingly limited. By contrast, Brasserie de Luxembourg is a subsidiary of the Interbrew group, the second largest brewer in the world. The cartel lasted for more than fourteen years. This led the Commission to double the amount imposed for gravity.
As an attenuating circumstance, the Commission recognised that there was legal uncertainty about the enforceability of beer ties in Luxembourg at the time the cartel agreement was signed and that this may have led the parties to doubt whether certain provisions of the cartel constituted an infringement. This merited a 20% reduction in the fines.
Brasserie de Luxembourg Mousel-Diekirch was granted total exemption from the significant fine that would otherwise have been imposed because it was the first to inform the Commission about the cartel, it provided decisive evidence and co-operated fully throughout the investigation.
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 are deducted from the contributions made by Member States to the EU budget, ultimately to the benefit of the European tax payer.
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/01/1739 of today on the decision reached concerning the Belgian beer cartel case.