(Updates with further investigation details, further Kroes comment)
BRUSSELS (Thomson Financial) - The European Commission said it has fined Dutch brewers Heineken NV, Royal Grolsch NV and Bavaria NV a total of 273.8 mln eur over cartel activities in the Dutch beer market in the late 1990s.
Heineken was fined 219.3 mn eur, Grolsch was fined 31.7 mln and Bavaria was sanctioned 22.9 mln.
The commission said the companies held numerous unofficial meetings between at least 1996 and 1999, during which they coordinated prices and price increases of beer in the Netherlands.
The EU executive added that Belgian brewer InBev SA, although involved in the illegal activity, received no fines as they acted as the cartel whistleblower.
EU competition commissioner Neelie Kroes said: 'It is unacceptable that the major beer suppliers colluded to hike up prices and carve up the market between themselves.'
'The highest management of these companies knew very well that their behaviour was illegal, but they went ahead anyway and tried to cover their tracks'.
The commission noted, however: 'The procedure in the present case, which exceeded seven years since the inspections, has been unduly long.'
For this reason, the total fine has been reduced by 100,000 eur.
The commission said the four brewers coordinated prices and price increases of beer at meetings both in the on-trade segment of the market, where consumption is on the premises, such as at hotels, restaurants and cafes, as well as the off-trade market segment, where consumption is off the premises (mainly sold through supermarkets), including private label beer.
Private label beer is either sold under a supermarket chain's own brand, or under a brand name unsupported by advertising.
In the on-trade market segment the brewers coordinated the rebates granted to pubs and bars, which are the main element of pricing, using the 'sliding scale'.
The commission said there was also proof that they occasionally coordinated other commercial conditions offered to individual customers in the on-trade segment in the Netherlands, and engaged in customer allocation, both in the on-trade and the off-trade segment.
The EU executive added that there was evidence that in all four brewery groups high-ranking management (such as board members, the managing director and national sales managers) participated in the cartel meetings and discussions.
There was also evidence that the companies were aware that their behaviour was illegal and took measures to avoid detection, such as using code names and abbreviations to refer to their unofficial meetings and holding these meetings in hotels and restaurants.
The commission said it uncovered a cartel on the Belgian beer market in 2001.
It ruled that Interbrew (now InBev), together with French food group Danone, was engaged in a pact to share the Belgian hotel, restaurant and cafe outlet market and to co-operate over pricing.
InBev then admitted it was also involved in cartels in other European countries.
This led to surprise inspections on brewers in France, Luxembourg, Italy and the Netherlands.
The commission then issued fines against France's Danone and Heineken for trying to balance the 'away-from-home' market away from their groups and three Netherlands' brewers for a market sharing cartel.
The Italian investigation was closed without charges being brought.
In early Sept 2005, the commission opened its antitrust investigation into Heineken, Grolsch, Bavaria and InBev. It sent a 'statement of objections' to 'several brewers' detailing competition concerns.
In a press conference today, Neelie Kroes told reporters she could not rule out the possibility of further action over the beer cartel.
'It is unwise to say if we are finalising this operation. If there is a need to, we will act,' she said.
She added that fines will be higher in the future if that's what is needed to deter potential offenders and that the commission's leniency system for whistle blowers is 'working'. nina.chestney@thomson.com nc/gp/nc/gp COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
