In May 2019, the European Commission imposed a fine of EUR 200 million on the beer manufacturer AB InBev for violating antitrust law. The world's largest beer company has its market dominance abused on the Belgian beer market to prevent cheaper imports of its Juliper brand beer from the Netherlands to Belgium.
Author:
dr Christian Andrelang, LL.M.
Lawyer
Specialist lawyer for international business law
Specialist lawyer for commercial and corporate law
Dominant position – what is it about?
Due to the stronger price competition for beer in the Netherlands, AB InBev had to sell beer to retailers there at lower prices than in Belgium. The dealers in the Netherlands wanted to supply the beer to the higher-priced market in Belgium. AB InBev has prevented this using the following methods:
AB InBev changed the packaging, labeling and information language of the beer sold in the Netherlands to make it unsaleable in Belgium. AB InBev only sold limited quantities to dealers in the Netherlands in order to effectively restrict the import of these beer products into Belgium. In addition, AB Inbev linked the delivery of the Dutch dealers to the following sales commitments: On the one hand, they had to undertake to sell the beer in limited quantities to Belgium. Secondly, InBev granted special discounts to Dutch dealers only on condition that these special conditions were not passed on to dealers in Belgium.
Dominant Position – What's New?
Are all companies banned from these methods? That depends on whether the company is dominant or not. An indicator of a dominant position is regularly a market share of over 40%. However, the antitrust authorities also check whether a company can change the price at will, regardless of the behavior of its competitors, and in particular increase it, without losing market share. The industry conditions are also decisive. For example, if market entry is difficult for newcomers, this strengthens an already strong market position.
A high market share is not prohibited under antitrust law. However, dominant companies are not allowed to use the same methods as "normal" companies in some areas. You are allowed to keep your market power, but you must not abuse it, neither against competitors nor against the trade.
What does that mean?
Changing the labeling to make it more difficult to sell in another EU country may not raise any antitrust concerns for companies that are not strong in the market. However, consumer protection law in the respective country can put a stop to this. However, antitrust law not only sets a limit for dominant companies, but also for selective sales: If a company sells its products in several EU countries, sales between authorized dealers must also be permitted across borders and must therefore not be restricted in practice.
Quantity limits are a classic means of disciplining traders, especially to maintain a certain price level. If such a quantity limitation has a noticeable effect, it is inadmissible under antitrust law not only for dominant companies.
On the other hand, antitrust law makes a clear distinction when it comes to the design of conditions, in particular the linking of delivery to further promises by dealers: Only dominant companies are prohibited from this linking. Other companies are usually allowed to do so if they do not otherwise violate competition law. However, the methods chosen by AB Inbev, "quantity limitation for cross-border trade" and "ban on passing on price advantages", violate the prohibitions on market foreclosure and price freedom. It would be different, for example, with product bundling, which is only prohibited for dominant companies if this amounts to the exploitation of market power.
What is important to you now?
If you do not agree with your supplier's sales practices, have them checked for their antitrust admissibility. If you have indications that your supplier has more than 40% market share for a product or a range of products that he supplies to you, you may have greater scope to defend yourself against violations of antitrust law. As a specialist lawyer for international commercial law, I am happy to support you.
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