On May 13, 2019, the Commission fined AB InBev €200 million for abusing its dominant position on the Belgian beer market by restricting the ability of Belgian customers to purchase cheaper products from the neighboring Netherlands between February 9, 2009, and October 31, 2016.[1] The Commission’s investigation commenced on June 30, 2016, just a month after it had concluded an in-depth examination of several EU beer markets, including Belgium, in its merger review of AB InBev/SABMiller (“SABMiller Decision”).[2]

The Commission’s Decision

Dominance. The Commission found that AB InBev is dominant on the Belgian beer market for four reasons: (i) its consistently high market shares, (ii) its ability to price independently from competitors, (iii) high barriers to significant entry and expansion by competitors in Belgium; and (iv) the limited countervailing buyer power of customers, in large part because several of AB InBev’s brands are considered essential for retailers to stock. The Commission’s findings in this case are similar to those in its SABMiller Decision where the Commission similarly identified, for Belgium, AB InBev’s high market shares in excess of 50% and resulting ability to lead pricing, as well as significant barriers to entry, “must-have” brands, and fragmented supermarket purchasing behavior.

Infringement. The Commission found that AB InBev abused its dominance by trying to prevent Belgian supermarkets and wholesalers from importing Jupiler beer from the Netherlands, where it was cheaper than in Belgium. This type of cross-border restriction on sales by a dominant company is a well-recognized form of abuse.[3] The Commission’s press release describes four specific methods that AB InBev used to implement this strategy:

First, AB InBev changed the packaging of its Jupiler products in the Netherlands, which made them harder to sell in Belgium. This included changing the labelling of its products to remove any French language content, which was necessary to sell the beer products in bilingual Belgium. AB InBev also altered the size of its products, and introduced design differences to Dutch Jupiler beer cans to make them less appealing to Belgian consumers, such as adding the language “Jup Holland Jup,” a variant of the popular “Hup Holland Hup” or “Go Holland Go” football chant.

Second, AB InBev restricted sales of Jupiler to a Dutch wholesaler that presumably made significant onward sales to Belgian customers, which the Commission found had resulted in restrictions of imports to Belgium.

Third, AB InBev refused to sell its “must-have” products—essential stock for Belgian retailers—to a particular retailer unless it agreed to limit its imports of cheaper Jupiler from the Netherlands.

Fourth, AB InBev required a retailer that was active in both Belgium and the Netherlands to only offer certain customer promotions to its Dutch customers.

Remedy and fine. AB InBev acknowledged and ceased its abusive conduct, and committed to provide mandatory food information in French and Dutch on all new and existing products sold in Belgium, the Netherlands, and also France (which was not part of the abusive conduct) for a period of five years. These changes will facilitate easier cross-border sales by eliminating the need for Belgian importers to relabel French and Dutch products. In exchange for this cooperation, the Commission granted AB InBev a 15% fine reduction.

Implications

Continued scrutiny of cross-border sale restrictions. The decision represents yet another example of the Commission’s ongoing enforcement focus against commercial behavior that restricts cross-border sales within the EU. The AB InBev investigation also confirms that in challenging conduct, the Commission will not only characterize companies’ behavior as restrictive agreements in breach of Article 101 TFEU,[4] but also as unilateral abusive conduct under Article 102 TFEU where an undertaking is dominant.[5]

Interestingly, changes to a product’s labelling, size, and other packaging features are commercial and marketing decisions that companies routinely make for perfectly legitimate reasons. The fact that the Commission placed so much importance on AB InBev’s behavior in this regard—both in the length dedicated to the abuse in its press release and in agreeing to a commitment centered on preventing it in future—strongly suggests that its investigation discovered considerable evidence that AB InBev made its alterations with the specific intent of impeding cross-border sales.

A Dutch can of Jupiler. The Commission’s press release placed particular importance on AB InBev’s decision to change the packaging of its beer products.

Benefits of cooperating in non-cartel cases. AB InBev received a 15% fine reduction in exchange for active cooperation with the Commission, including acknowledgement of the infringement and providing assistance in formulating a remedy. Although the reduction demonstrates the benefits of cooperating with the Commission, it may be contrasted with the significantly higher reductions offered in the Guess and Nike investigations, for instance, where both companies received fine reductions of 40-50%.

Although the Commission’s full reasoning for the relatively smaller reduction in AB InBev’s case has not yet been published, it is noteworthy that Guess and Nike settled with the Commission prior to any statement of objections, whereas in AB InBev’s case the company disputed the Commission’s case until at least that point. To the extent that the Commission is more likely to grant a higher fine reduction for early cooperation, companies should carefully assess not only to what extent they should contest the Commission’s allegations, but also at what stage in the investigation—if any—to cooperate.

Recent Fine Reductions For Cooperation In Non-Cartel Antitrust Procedures

 Source: European Commission

[1]      Commission Press Release IP/19/2488, “Antitrust: Commission fines AB InBev €200 million for restricting cross-border sales of beer,” May 13, 2019.

[2]      AB InBev/SABMiller (Case COMP/M.7881), Commission decision of May 24, 2016.

[3]      Coöperatieve Vereniging “Suiker Unie” UA and others v. Commission (Joined cases 40 to 48, 50, 54 to 56, 111, 113, and 114-73), EU:C:1975:174.

[4]      See the Commission’s decisions fining Nike and Guess for imposing territorial restriction in their distribution agreements for consumer goods, reported in our March 2019 and December 2018 newsletters, respectively. See too, the Commission’s decision to accept commitments by a number of media companies not to impose passive sales restrictions on cross-border sales of Pay-TV services, also covered in our March 2019 newsletter.

[5]      In this regard see the Commission’s decision imposing obligations on Gazprom not to impede cross-border flows of natural gas through contractual restrictions with customers, reported in our Q2 2018 report. See too, the Commission’s on-going investigation into Qatar Petroleum’s territorial restrictions in its agreements with its natural gas customers, which the Commission is investigating under both Articles 101 and 102 TFEU.