E-Malt.com News article: 3115

Brazil ministry to probe AmBev's sales practices
By Patricia Duarte

BRASILIA, Brazil, Aug 13 (Reuters) - The Brazilian justice ministry's antitrust watchdog said on Friday it would investigate AmBev (AMBV4.SA: Quote, Profile, Research) (ABV.N: Quote, Profile, Research) to see if the beverage giant's sales practices broke competition rules.

The probe of Companhia de Bebidas das Americas (AmBev) by the Economic Rights Secretariat (SDE) comes after smaller privately owned local rival Schincariol said the market leader's sales agreements were preventing its expansion.

Schincariol, which was chiefly responsible for weakening AmBev's dominance of the Brazilian beer market last year, says an AmBev loyalty program started last November obliged retailers to agree to only sell AmBev products and not advertise rival brands.

Schincariol had also said AmBev slashed the price of its Antarctica beer to make it a "combat brand" against the smaller rival's main beer, Nova Schin, the SDE said.

Schincariol lawyer Vinicius Camargo Silva said the company had statements from retailers backing up their claims and evidence of AmBev loyalty programs in northeast Brazil.

AmBev, which is being bought by Belgium's Interbrew (INTB.BR: Quote, Profile, Research) , denied the claims.

"The company's client incentive programs follow the standards of the international market ... There is no condition of exclusivity - the point of sale is totally free to sell rival products," AmBev said in a statement.

It also said the retail price of its Antarctica beer was 30 percent higher than Nova Schin and 8.2 percent more expensive than Kaiser, the main Brazilian brand of Canada's Molson Inc. (MOLa.TO: Quote, Profile, Research) , so it could not be considered a "combat brand".

The SDE said AmBev had 15 days to respond to the claims once it had been formally notified of the investigation.

AmBev, which posted a second-quarter net profit this week that was doubled from a year earlier, has said it held a 66.3 percent share of the Brazilian beer market in June, up from 65 percent in March.

Schincariol, which helped drag AmBev's market share to 63.2 percent last December from 70.1 percent in June 2003 with a revamp of its main brand and a big advertising campaign, held a 13.1 percent share of Brazil's beer market in June.

The stock price of AmBev, whose beer brands include Brahma and Skol, closed steady at 657.50. Brazil's benchmark Bovespa stock index finished 0.8 percent in the red.

18 August, 2004