Published: Friday 9 February 2007
A €42 million fine imposed on Danone for illegal price-fixing on the beer market in Belgium during the 1990s is entirely justified, the European Court of Justice ruled on 8 February 2006, confirming the Commission's new, tougher guidelines for fixing anti-trust fines.
In the 1990s, Danone owned the dominant Kronenbourg brand and was one of the largest actors on the beer market in France, while Interbrew, with its Stella Artois and Jupiler brands, was even more dominant in Belgium.
In 1993, a Danone manager contacted his counterpart in Leuven, location of the Interbrew headquarters, to inform him that Interbrew must leave 500,000 hectolitres of beer to Danone's Belgian subsidiary Alken Maes, or else Danone would "make life difficult" for its competitor on the French market.
Interbrew entered into negotiations, and the blackmail attempt started a serious of meetings at the highest company level. Soon, price-fixing and market-sharing in Belgium were discussed. In 1994, a 'gentleman's agreement' was concluded, in which the CEOs of the two companies agreed to respect each other's positions on the Belgian market. Danone had a history concerning this: in 1974 and in 1984, its predecessor company, Boussois-Souchon-Neuvesel (BSN), had been fined for setting up a cartel in the flat-glass market.
Over five years, until 1998, the CEOs of Danone and Interbrew met to sort out the beer market in Belgium between themselves. At one point, smaller breweries were involved, but by far the biggest share went to the largest and second-largest brewers on the market. In the end, Interbrew blew the whistle on the collusion and immediately put a sizeable amount of money aside to pay fines that Interbrew lawyers foresaw - the company, which has since become Inbev and is the biggest brewer in the world, paid €46.5 million for its participation in the cartel.
Danone was, in spite of its much-smaller share of the Belgian market, fined a similar sum, namely €44.6 million. Under new, tougher rules for setting the amount of fines, Danone's initial threat, its role as the instigator of the cartel and the fact that it acted as a repeater were taken into account as aggravating factors. The company, which had in 2000 withdrawn from the beer market for good, appealed against the 2001 decision. The case was lost, however, in 2005, and Danone appealed again.
On 8 February 2007, the Court of Justice dismissed the appeal in its entirety. As regards the amount of the fine, the Court held that "whereas the basic amount of the fine is set according to the infringement, its gravity is determined by reference to numerous other factors, in respect of which the Commission has a wide discretion. According to the Court, to take into account aggravating circumstances when setting the fine is consistent with the Commission’s task of ensuring compliance with the competition rules."
