E-Malt.com News article: Hungary: Competition authority orders the largest breweries to reduce sales via exclusive contracts

Hungary's competition authority on July 30 ordered the largest breweries operating in Hungary to reduce their beer sales via exclusive contracts to pubs, hotels, restaurants and other catering venues so that smaller firms can gain market share, Nasdaq reported.

The largest breweries - the local arm of Dutch brewer Heineken NV, London-based SABMiller PLC, and Molson Coors Brewing Co. - have agreed to comply, so the authority, GVH, decided no infringement was committed and didn't impose any fines.

Based on its investigation of the big breweries' contracts between 2007 and 2013, GVH established that the firms, together with brewer Pecsi Sorfozde Zrt., controlled by Ottakringer Getraenke AG of Austria, commanded about 44% of beer sales in Hungary's catering sector.

With Carlsberg A/S, which has no brewery in Hungary but is a major importer, these five biggest participants share up to 95% of the market, GVH said.

"As a result, neither imported products nor smaller breweries could obtain market share from the big breweries because of the exclusive contracts," GVH said.

Heineken Hungary has always conducted business in compliance with the legal regulations and the rules of fair market behavior, the company said in an emailed statement to The Wall Street Journal. The company operates two breweries in Hungary and employs 520 people.

"Throughout the investigation of the Hungarian competition authority, we have been co-operating with their representatives, sharing all the requested data and offering a commitment to reduce the amount of beer sold to single outlets under exclusivity terms as stated in the order of the Hungarian Competition Authority," Heineken Hungary said.

The competition authority has ordered that Heineken Hungaria Sorgyarak Zrt., Borsodi Sorgyar Kft., a unit of Molson Coors, and Dreher Sorgyarak Zrt., a subsidiary of SABMiller, should reduce their beer sales volumes sold under exclusive contracts in two steps by nearly 20% by the end of 2017.

"Borsodi Brewery is ready to face the competition as set out in the commitments of the concerned breweries, approved by the Hungarian Competition Authority," the company said.

As a result of the compliance, market share will fall by about 4% for Heineken and 5% each for the other two firms, resulting in an overall drop in their joint share of the catering market to 30% from 44%, GVH said. Pecsi's market share has proved to be small, requiring no action, the authority added.

Beer sales totaled less than 6 million hectolitres in Hungary in 2012, down from 7 million in 2007. Sales to pubs and other catering venues accounted for about two-thirds of the sales volume. Revenues of the five largest brewers from their locally made beer and including Carlsberg's beer imports totaled an estimated 139.67 billion Hungarian forints ($ 498.7 million) in 2012.


31 July, 2015