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Brussels, 29 September 2004

Cartel fine in the French beer market

Today the Commission imposed fines totalling € 2.5 million on the two main brewery groups in France. The two groups are being fined for having taken part in an agreement aimed at establishing equilibrium between their integrated beer distribution networks in the away-from-home sector (hotels, restaurants and cafés) France.  The agreement was also aimed at limiting the acquisition costs of drinks wholesalers.

On 21 March 1996 the then two main brewery groups in France, Groupe Danone/Brasseries Kronenbourg S.A.[1], and Heineken N.V./Heineken France S.A. (then “Sogebra”), entered into an “armistice” agreement with the aim of balancing the away-from-home (or: “horeca”) market between their groups. The agreement followed an “acquisition war” regarding drinks wholesalers, during which each group was buying up a large amount of drinks wholesalers in a short period of time, leading to an inflation of the acquisition costs of such wholesalers.

The armistice agreement aimed on the one hand at bringing a rapid end to the rising costs of acquiring the drinks wholesalers, and on the other hand, at the balancing of the integrated distribution networks of the parties concerned. This clearly appears from an internal note of 22 March 1996 of the Heineken group, in which the CEO of Heineken France writes to the board of Heineken N.V.: “Yesterday we have reached agreement with Danone to put an end to the stupid and costly acquisition war. 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 market...”

In order to reach these aims, the parties agreed, in particular on: (1) a temporary acquisition stop (prohibition to proceed with acquisitions of wholesalers outside an agreed list), (2) the balancing of the total volume of beer distributed through the integrated network of each party and (3) the balancing of the volume of beer brands distributed by each party on behalf of the other party.

The “armisitice” agreement of 21 March 1996 was thus intended to control investment by the two groups and was akin to an agreement to partition the away-from-home market. However, the agreement has never been implemented. The Commission has taken into account this fact in establishing the amount of the fine.

The fines

The Commission has imposed the following fines:

  • Groupe Danone and Brasseries Kronenbourg S.A.: € 1.5 million
  • Heineken N.V. and Heineken France S.A.: € 1 million

The calculation of the fines takes account of the nature of the infringement, its geographical extent and its absence of impact on the market in view of the non-implementation of the armistice agreement. Taking into consideration all these elements, the Commission finds this infringement to be serious.

As aggravating circumstance, recidivism was retained against Groupe Danone/Brasseries Kronenbourg S.A. because Groupe Danone (at that time “BSN”) has already been fined in 1984 for market sharing agreements aiming at maintaining a status quo and at establishing equilibrium within the market. No attenuating circumstances were withheld.

This decision follows the 2001 Commission decisions resulting in fines for brewers in Belgium (see IP/01/1739) and in Luxembourg (see IP/01/1740).

[1] In the year 2000, several years after the infringement, Brasseries Kronenbourg S.A. was acquired by the UK based brewery group Scottish & Newcastle.

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