Dutch “Beer Cartel” Fined €273 Million by European Commission 

18/04/07 The European Commission has fined the Dutch brewers Heineken, Grolsch and Bavaria a total of €273 783 000 for operating a cartel on the beer market in The Netherlands, in what it says is a clear violation of EC Treaty rules that outlaw restrictive business practices. The Commission's decision names the Heineken group, Grolsch and Bavaria, together with the InBev group which also participated in the cartel. Beer consumption is around 80 litres per capita in The Netherlands. Between at least 1996 and 1999, the four brewers held numerous unofficial meetings, during which they coordinated prices and price increases of beer in The Netherlands. InBev received no fines as they provided decisive information about the cartel under the Commission’s leniency programme.

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."

After the Commission, on its own initiative, uncovered a cartel on the Belgian beer market, InBev provided information under the auspices of the Commission's leniency policy that it was also involved in cartels in other European countries. This led to surprise inspections on brewers in France, Luxembourg, Italy and the Netherlands. These investigations led to decisions condemning cartels in Belgium, France and Luxembourg. The Italian investigation was closed without charges being brought.

The evidence uncovered in the inspections, in particular handwritten notes taken at unofficial meetings and proof of the dates and places when these meetings took place, showed that Heineken, InBev, Grolsch and Bavaria ran an illegal cartel in The Netherlands. This fully confirms the corporate statements provided by InBev.

At meetings called "agenda meeting", "Catherijne meeting" or "sliding scale meeting", the four brewers coordinated prices, and price increases of beer in The Netherlands, both in the on-trade segment of the market - where consumption is on the premises (known in Dutch as “horeca”, an acronym for ‘hotels, restaurants and cafés’) - and the off-trade market segment - consumption 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". Moreover, there is 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 Commission has 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 is also evidence that the companies were aware that their behaviour was illegal and took measures to avoid detection, such as using a panoply of code names and abbreviations to refer to their unofficial meetings and holding these meetings in hotels and restaurants.

InBev did not contest the facts outlined in the Commission's Statement of Objections.

As a result of its decision, the European Commission imposed a fine on Heineken of €219,275,000. Heineken responded by saying it was “highly surprised by the decision and finds the fine excessive and unjustified given the strong arguments that the company put forward to the European Commission.” The imposed fine will be treated as an exceptional item in this current year and will have no impact on the Heineken N.V. 2007 full-year forecast of 10-13% organic growth in net profit, the company stated.