E-Malt.com News article: Brazil: Ambev to pay $185 mln as fine for stifling competition

The Brazilian unit of international brewing giant Anheuser-Busch InBev NV has settled its dispute over a fine of 352.7 million reais ($185 million) imposed by the Administrative Council for Economic Defense, or CADE, after its reseller loyalty program was found to stifle competition.

Ambev SA began challenging the 2009 fine, which was later lowered to 229.1 million reais, before the Brazilian judiciary but has now agreed to abide by the decision, CADE said in a statement on July 14.

The settlement puts an end to any lawsuits, tax foreclosures and other procedural issues related to CADE's investigation of the loyalty program, “ending [the] dispute which has dragged on for several years and would last for more than a decade,” Ambev said.

“It is a historical agreement for the defence of competition in Brazil, which enabled the fulfilment of CADE’s decision and will spill over to eventual judicial agreements,” CADE President Vinicius Marques de Carvalho said in a statement on July 14.

CADE said it based the size of the 2009 fine both on Ambev's large market share — it accounts for nearly 70 percent of Brazil's beer sales — and the program's aim to encourage resellers to make sure at least 90 percent of the beer they sell comes from Ambev.

The program offered discounts and rewards to resellers who agreed to exclusively sell Ambev products or sell less of competitor products, CADE said.

The program, called "To Contigo," or "I'm with you," ran a high risk of closing competitors out of the market and of raising their costs, the watchdog decided. In addition to the fine, the tribunal also determined that the program should be terminated. Ambev confirmed in a separate statement that it had been.

CADE Chief Attorney Victor Rufino said the fine imposed on Ambev was the agency's largest ever. “It is a considerable amount for a unilateral conduct and the judicial agreement results in substantial recognition of the authority of CADE’s decision by Ambev,” he said in a statement.

CADE launched its investigation of the practice in 2004 when Ambev rival Grupo Schincariol filed a complaint.

Ambev, Latin America's largest brewer, joined with InBev in 2004 when the global beverage giant took over a majority voting stake in Ambev in a stock exchange. At the same time, Ambev took over InBev Canadian subsidiary Labatt, though InBev agreed to divest the unit's American business as part of its $42 billion takeover of Anheuser-Busch Co. Inc. in 2008.

Ambev increased its market share in Brazil from 63.2 percent in 2003 to 69.3 percent in 2009.



17 July, 2015