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EU fines brewers $370M in price-fixing probe

European Union regulators fined Heineken NV, Grolsch NV and Bavaria NV $370 million on Wednesday for fixing Dutch beer prices.
/ Source: The Associated Press

European Union regulators fined Heineken NV, Grolsch NV and Bavaria NV $370 million on Wednesday for fixing Dutch beer prices.

The fines, including a 219.3 million euro penalty to be paid by Heineken, pushes the total levied by the European Commission against cartels in 2007 to $2.7 billion, already surpassing last year's record total.

The EU ordered Grolsch NV to pay 31.7 million euros and Bavaria NV 22.9 million euros for a cartel regulators said they ran from at least 1996 to 1999 to coordinate Dutch beer price increases.

Brewer InBev SA was exempted from a potential fine of $114 million because it blew the whistle on several European beer cartels, providing "decisive information," after regulators caught it price-fixing in Belgium.

EU Competition Commissioner Neelie Kroes said the high fines were a warning to any company currently involved in an illegal cartel that increases prices for customers.

"If you do take part in cartels, you will face very substantial fines, so don't be tempted to start is my advice," she said. "If you are already in a cartel, then blow the whistle to the Commission to gain immunity before someone else blows the whistle on you."

Heineken called the fine "excessive and unjustified" and said would study the ruling with the intention of appealing to the EU courts. The company rejected the EU conclusion that Dutch price hikes were coordinated. Instead, it said, consumer prices for beer sold in shops fell during the late 1990s and price increases for trade customers were in line with general price trends.

Grolsch said it was "stunned" and would appeal. Bavaria had previously vowed to contest any fine.

The EU said the illegal cooperation among the beer companies involved senior executives such as board members, the managing director and national sales managers.

"I was very disappointed to learn from our investigation into this case that the management of these companies at the very highest level participated in this cartel ... knowing that this behavior was illegal," Kroes said. "Instead of respecting the law, they instead covered their tracks."

They knew what they were doing was illegal, the Commission said, because they tried to avoid detection by using code names and abbreviations to refer to the meetings held in hotels and restaurants. Under EU law, executives are not personally liable for taking part in a cartel.

There were numerous unofficial meetings where the four companies coordinated prices and price increases for beer that customers buy in bars and beer they buy from supermarkets, the EU's executive arm said.

Heineken's fine was higher because it holds more than half the Dutch market in terms of revenue and volume, Kroes said. She said the amount also reflected the length of the activity and the effort EU officials faced in unearthing evidence.

The levies against the beer makers come two months after the EU fined elevator and escalator makers $1.3 billion, including $630 million against repeat offender ThyssenKrupp, the largest ever for one company.

In January, it levied a $978 million fine on a cartel that fixed the prices for heavy equipment used by power utilities, with Siemens AG ordered to pay more than half the total.

Last year, the total fines against cartels came to $2.4 billion, a figure already surpassed by such fines in the first four months of this year.