EU: The European Commission has fined brewers Heineken and Kronenbourg 2.5 million euros (1.7 million pounds) for reaching an "armistice" agreement to divide beer distribution networks in France, Reuters revealed on September 29. The Commission, the European Union's executive, said on Wednesday France's two main brewers had agreed in 1996 to stop acquiring distributors outside an agreed list, calling a halt to an "acquisition war" that was costly for both firms.

The Commission, the EU's executive, fined Dutch brewer Heineken 1 million euros. Groupe Danone and Brasseries Kronenbourg received a 1.5 million euro fine. The Kronenbourg brand has since been bought from Danone by Britain's biggest brewer, Scottish & Newcastle.

The Commission, the European Union's executive, said France's two main brewery groups had agreed in 1996 to stop acquiring distributors outside an agreed list, calling a cease-fire in an "acquisition war" that was costly for both firms.

Heineken and Kronenbourg also agreed to balance the total volumes of beer they distributed, as well as the volumes of each other's beer brands that they delivered, the Commission said.

The Commission said the agreement, code-named "armistice", was never implemented and it took this into account when assessing the fines.

The Commission quoted an internal note from the CEO of Heineken in 1996, who wrote: "Yesterday we have reached agreement with Danone to put an end to the stupid and costly acquisition war."

Heineken said in a statement that it was studying the ruling in order to decide if it would make an appeal, but that the size of the fine indicated the alleged infringement was only "incidental" in nature.

Commission spokesman Tilman Lueder said the Commission, which has already levied more than 90 million euros in fines for beer cartels, had one outstanding investigation in the Netherlands. That would not close imminently, he said.

29 September, 2004