European Commission fined AB InBev €200 million for Antitrust issue
AB InBev has an ugly history of violating and avoiding regional and national commercial rules to increase their profit margins.
In May 2019, the European Commission fined the beer giant €200,409,000 by for breaching European Union (EU) antitrust rules.
The Belgian brewer has abused its market-dominant position by hindering cheaper imports of its Jupiler brand from the Netherlands into Belgium.
In Belgium, AB InBev’s Jupiler is the most dominant beer brand, occupying approximately 40% of the total Belgian beer market in terms of sales volume.
AB InBev also sells Jupiler in the other EU Member States, including Netherlands and France. But in the Netherlands, AB InBev sells Jupiler to retailers and wholesalers at lower prices than in Belgium due to increased competition.
This antitrust issue was investigated already in 2016. The European Commission concluded that AB InBev is dominant in the Belgian market. While market dominance is not illegal per se according to EU antitrust rules, specifically according to Article 102, the dominant companies are not allowed to deliberately exploit their market position to restrict competition.
Violating the law, AB InBev is found to be abusing its market dominance. The beer giant restricted the possibility for supermarkets and wholesalers to buy Jupiler beer at lower prices in the Netherlands and to import into Belgium. AB InBev removed the French version of mandatory information from the labelling and changed the design and size of beer cans to make it harder to sell to Belgian consumers.
7 years of trade violations
The European Commission concluded that the company abused its dominant position from February 2009 until October 2016 in breach of EU antitrust rules. In 2017, the Commission initially alleged that AB InBev engaged in unlawful practices.
Margrethe Vestager, EU Competition Commissioner, said, as per FoodBev.com:
Consumers in Belgium have been paying more for beer because of AB InBev’s deliberate strategy to restrict cross-border sales between the Netherlands and Belgium.
Attempts by dominant companies to carve up the single market to maintain high prices are illegal. Therefore, we have fined AB InBev €200 million for breaching our antitrust rules.”
Margrethe Vestager, EU Competition Commissioner
How AB InBev’s uses its market dominance
The decision concluded that AB InBev is dominant on the Belgian beer market. Due to the market dominance in Belgium, the beer giant can increase beer prices independently from competitors and remain immune to price competition. In neighboring Netherlands, however, AB InBev is facing more competition. Therefore the multinational sold its Jupiler beer for cheaper prices than in Belgium. In Belgium, AB InBev obstructed supermarkets and wholesalers from selling Jupiler at lower prices, for example through changes in packaging and labeling for Belgian retailers.
After seven years of trade violations, the European Commission finally acknowledged that AB InBev cooperated beyond its legal obligation to do so, in particular by acknowledging the infringement of competition rules and by proposing a remedy. The beer giant was granted a 15% fine reduction in return for its cooperation.
The beer giant will now provide mandatory food information in both French and Dutch on products for sale in Belgium, France and the Netherlands for the next five years.
Trade violations appear common practice
In April 2019, news broke that the outdoor apparel company Patagonia had sued AB InBev for similarities in the new beer line launched by AB InBev called ‘Patagonia Brewing Company’. AB InBev launched the product in Colorado, U.S. recently and Patagonia argues the product by AB InBev is purposefully meant to confuse consumers and take advantage of Patagonia’s over 40 years legacy. AB InBev was denying the allegation.
A multiple years-long price fixing scheme in Germany had also implicated AB InBev.
In India and the United States in 2016, AB InBev had been fined $6 million after being caught bribing Indian officials to boost sales of its beer – and then trying to silence a whistleblower by threatening them with a $200,000 fine. The Securities and Exchange Commission (SEC) of the United States said that AB InBev would pay $6 million to settle charges that an Indian unit of the beer giant made unethical payments to Indian government officials and then threatened a whistleblower who reported the misconduct.
Sources
European Commission Press Release: “Antitrust: Commission fines AB InBev €200 million for restricting cross-border sales of beer“