Commission Decision

of 5 December 2001

relating to a proceeding under Article 81 of the EC Treaty

(Case IV/37.614/F3 PO/Interbrew and Alken-Maes)

(notified under document number C(2001) 3915)

(Only the Dutch and French versions are authentic)

(2003/569/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation No 17 of 6 February 1962, the first Regulation implementing Articles 81 and 82 of the Treaty(1), as last amended by Regulation (EC) No 1/2003(2), and in particular Article 15(2) thereof,

Having regard to the Commission's decision to initiate proceedings in this case, taken on 29 September 2000,

Having given the undertakings concerned the opportunity of being heard on the objections raised by the Commission, in accordance with Article 19(1) of Regulation No 17 and Article 2 of Commission Regulation (EC) No 2842/98(3),

Having consulted the Advisory Committee on Restrictive Practices and Dominant Positions,

Having regard to the final report of the Hearing Officer in this case(4),

Whereas:

1. INTRODUCTION

(1) This case concerns long-term and complex restrictive agreements relating to the Belgian market in beer for consumption both on the premises ("the on-trade") and off the premises ("the off-trade"). Interbrew NV and Alken-Maes NV, the largest and the second-largest suppliers to the Belgian beer market, consulted together and concluded agreements concerning a general non-aggression pact; prices and promotions in the off-trade; customer sharing in the on-trade (both the "traditional" on-trade and national customers); the restriction of investment and advertising in the on-trade; and a new price structure for the on-trade and the off-trade. They shared information about sales to the on-trade and the off-trade. They sought to take some of these measures further through the Confederation of Belgian Brewers.

(2) There was separate consultation between Interbrew NV, Alken-Maes NV and the breweries NV Brouwerij Haacht and Martens NV concerning private-label beer, in particular with regard to customers and prices, and an exchange of information regarding private-label beer between those four brewers.

2. THE BELGIAN BREWING INDUSTRY

2.1. The market for beer in Belgium

2.1.1. Supply

(3) The number of firms engaged in brewing in Belgium has been falling slowly. In 1991 there were 76 brewers belonging to the Confederation of Belgian Brewers (Confederatie der Brouwerijen van België/Confédération des Brasseries de Belgique or "CBB"). At the beginning of 2000 the figure was 68(5). Some of these brewers own more than one brewery each.

(4) Although the number of breweries operating in Belgium is relatively high, brewing is in fact concentrated in the hands of a few firms. In 1998 the five biggest brewers in Belgium accounted for more than 80 % of total output. In the same year the two biggest brewers, Interbrew NV and Alken-Maes NV, together brewed about 70 % of the total volume of beer sold in Belgium(6).

(5) As well as the lager beer known as "Pils", "Pilsener" or "Pilsner", there is a great variety of speciality beers brewed in Belgium, including abbey and Trappist beers, gueuze and kriek, white beers, ales, seasonal beers and many local beers(7).

2.1.2. Demand

(6) Total beer consumption in Belgium has been falling slowly; in 1998 it was slightly over 10 million hectolitres, an average drop of 1,6 % per annum from the 1993 figure(8). About two thirds of total consumption consists of Pils. Of the speciality beers that make up the remainder, the most important are amber ale, abbey beer and white beer, each of which has a share of total consumption of 5 % to 6 %(9). Between 1993 and 1998 production of beer in Belgium declined by an average 0,4 % per annum(10).

(7) About 60 % of total beer consumption takes place on the premises in one of approximately 50000 outlets; this channel is hereinafter referred to as "the on-trade", and in Belgium is usually known in both Dutch and French as the "horeca" sector, an acronym for "hotels, restaurants and cafés". Beer is distributed to such outlets mainly by wholesalers specialising in the on-trade. The number of beer wholesalers in Belgium has been falling in recent years as a result of mergers, takeovers and closures, but the number in operation is still relatively large. Estimates range from 1200(11) to 1800(12). Some volumes are also distributed direct to the trade by the brewers themselves.

(8) The remaining 40 % or so is sold by food retailers for consumption off the premises; this is hereinafter referred to as "the off-trade", and in Belgium is usually known as the "food" or "retail" trade. As well as the brewers' brands, an increasingly important role is played by retailers' own brands, known in Belgium by the English term "private-labels"; this is so especially in the Pils segment. In 1998 private-label beer amounted to 550000 hl, accounting for 5,5 % of total Belgian consumption(13).

(9) Thus the main developments in Belgium are: gradually declining demand; a slow decline in the number of brewers, wholesalers and drinks outlets; a growth in the importance of off-trade sales as compared with sales through the on-trade; and within the off-trade, a growth in the importance of private-label beer.

2.1.3. Price regulation

(10) Until 1 May 1993 the Belgian beer trade was subject to a Ministerial Order requiring price increases to be submitted to the competent minister. Brewers had to obtain the authorisation of the minister for any increase in the price of beer; they could apply either individually or collectively through a trade association(14). Applications for price increases were in fact submitted on the brewers' behalf by the CBB. The application had to provide a detailed statement of the reasons for the increase sought, giving figures, and a detailed list of existing prices and certain rebates. The annual accounts of the firms concerned also had to be attached. The CBB last submitted an application for a price increase on 23 December 1992. The minister allowed that increase on 6 February 1993, subject to the condition that the system of rebates remained unchanged and that no further price increases were carried out in 1993.

2.2. Brewers

(11) Annex II shows the market shares of the four Belgian brewers concerned for the period 1992 to 98 (in volume, rounded to whole figures). Market shares are given for the market as a whole and for the Pils segment. A distinction is also made on the basis of the distribution channel, between the on-trade and the off-trade.

2.2.1. Interbrew

(12) Interbrew NV ("Interbrew") is by far the largest Belgian brewer. Its main brands in Belgium are Jupiler and Stella Artois (Pils), Hoegaarden (white beer) and Leffe (abbey beer). All four of these are among the ten biggest selling brands on the Belgian market. Interbrew also has breweries in many other countries, including, in the European Union, the Netherlands, the United Kingdom and France. Outside the European Union Interbrew operates in Canada, where it took over the Canadian brewer Labatt in 1995, and in Eastern Europe and Asia. Interbrew is one of the ten largest brewers in the world. It has had a stock exchange listing since 1 December 2000. In the year 2000 its worldwide turnover was EUR 8605 million. In the same year its total turnover in beer in Belgium was EUR [ >500 million](15), of which EUR [< 5 million]; was derived from private-label beer.

2.2.2. Danone and its subsidiary Alken-Maes

(13) Brouwerijen Alken-Maes NV ("Alken-Maes") is the number two on the Belgian market; its brands include Maes and Cristal (Pils), Grimbergen (abbey beer), Ciney (a regional beer) and Brugs Tarwebier (white beer). In the year 2000 Alken-Maes' worldwide turnover amounted to EUR 120,78 million. In the same year its turnover in beer in Belgium totalled EUR [ >100 million]. In 2000, a turnover of EUR [< 5 million] was achieved for private-label beer in Belgium.

(14) Alken-Maes was set up in 1988 as a result of a merger between two brewers, namely Alken-Kronenbourg, which had formerly belonged to the French BSN group, and Maes. In 1992 BSN acquired a majority stake in the merged Alken-Maes, and replaced Alken-Maes's management; in 1994 BSN changed its name to Groupe Danone SA ("Danone"). The brewer Kronenbourg, which operates in France, also belonged to Danone. In the year 2000 Danone sold its beer operations to the UK Scottish and Newcastle group. In 2000 Danone's worldwide turnover was EUR 14287 million. In 1999 its turnover in beer in Belgium was EUR [ >100 million](16).

2.2.3. Martens

(15) Martens NV ("Martens") produces mainly private-label Pils for large retail chains such as Aldi. It brews its own beer under the Sezoens brand. It also imports the low-price Karlsberg brand from Germany (not to be confused with the Danish Carlsberg brand). In the year 2000 Martens' worldwide turnover was EUR 33598507. Of this figure, sales of beer in Belgium accounted for EUR [< 50 million]. Martens' turnover from private-label beer in Belgium was EUR [ >5 million] in 2000.

2.2.4. Haacht

(16) NV Brouwerij Haacht ("Haacht") is essentially a Pils producer. Its main brand is Primus. In the year 2000 its worldwide turnover was EUR 69416371, of which EUR [< 50 million] was accounted for by beer sold in Belgium. Haacht's turnover from private-label beer in Belgium was EUR [ >5 million] in 2000.

2.2.5. The trade association CBB

(17) All of the brewers listed above are members of the trade association, the CBB. The CBB represents the interests of its members. Day-to-day business is handled by a manager. Its activities are distributed between working parties and committees on which its members are represented.

2.3. Trade between Member States

(18) In assessing the available statistics, one factor must be borne in mind. According to the market research bureau Canadean, it is difficult to discern the real pattern of international trade from the official statistics published by the Belgian central bank, the Nationale Bank/Banque Nationale. At the beginning of 1995, for example, Interbrew took over the Dutch Oranjeboom brewery. Since then, in order to maximise production efficiencies, Interbrew has exported some volumes of beer in bulk from Belgium to the Netherlands for packaging, and reimported the packaged goods into Belgium for consumption. For want of a better alternative, however, Canadean nevertheless uses the central bank figures(17). In response to enquiries, the CBB has likewise referred to the central bank statistics, which are also published in its newsletter Het Brouwersblad/Le Journal du Brasseur(18). Thus the statistics given below are not to be understood as a precise measurement - no precise measurement is available - but only as indicative.

(19) According to Canadean, between 1993 and 1998 imports of beer into Belgium rose from 454000 hl to 916000 hl, which is about 9 % of total consumption. In 1998 something over 80 % of this came from other Member States. The countries from which most was imported were the Netherlands, Denmark, the United Kingdom, Germany and France(19). Interbrew states that over the period 1993 to 98 imports into Belgium rose from 337453 hl to 731202 hl. A study carried out for the CBB in 1994 by the consultancy firm Arthur D. Little estimates exports from France to Belgium at 60000 hl. The terms of reference of that study make it clear that there were concerns within the CBB at the time regarding parallel imports(20). Parallel importing occurs, for example, where a Belgian wholesaler buys Pils under Interbrew's Jupiler brand from Interbrew's French establishment, and then sells it in Belgium. The Arthur D. Little report also shows that in 1994 ex-brewery prices were substantially higher in Belgium than in France(21).

(20) There are a number of documents dating from 1993 which describe the impact of parallel imports on Interbrew, and the direct link between price differences in Belgium and France and these imports. The possible effect is stated to be a "destabilisation of the entire Belgian beer market". It is also said that "price setting, rebate policy ... is not a domestic question, but increasingly has to be discussed on an international basis."(22)

(21) Belgium is a major exporter of beer. Between 1993 and 1998 total exports rose from 3,6 million hl to over 4,8 million hl per annum. Over 90 % of this was exported to other Member States. The countries to which most was exported were France, the Netherlands, Germany, Italy and the United Kingdom(23).

3. PROCEDURE

(22) On 26 and 27 October 1999 inspections were carried out under Article 14(3) of Regulation No 17 at the offices of Alken-Maes in Waarloos and the CBB in Brussels.

(23) On 11 November 1999 requests for information were sent under Article 11 of Regulation No 17 to Interbrew, Alken-Maes and the CBB. The Commission had already taken copies of documents in the course of a separate proceeding, during an inspection it carried out at Interbrew's premises in Leuven on 13 and 14 July 1999, and Interbrew was now specifically asked to produce certain documents to the Commission afresh, in accordance with the established case law of the Court of Justice of the European Communities(24). These documents contained information which led to the inspections carried out in October 1999.

(24) The replies of Alken-Maes, Interbrew and the CBB were received on 10 December, 23 December and 24 December 1999 respectively.

(25) On 27 December 1999 Alken-Maes declared that it was invoking the Commission notice on the non-imposition or reduction of fines in cartel cases(25).

(26) On 10 January 2000 a request for information was sent to the Belgian Ministry of Economic Affairs. The Ministry replied by letter of 4 February.

(27) On 12 January 2000 a supplementary request for information was sent to the CBB under Article 11 of Regulation No 17. The CBB supplied the information requested by letter on 1 February.

(28) In letters of 14 and 19 January 2000 Interbrew supplied information supplementing its letter of 23 December 1999. In the light of this supplementary information the Commission sent an informal supplementary request for information to Interbrew by fax on 21 January. Interbrew replied by letter of 2 February. Interbrew again sent additional information by letters dated 8 and 28 February.

(29) On 29 February 2000 Interbrew submitted a statement relating to the Belgian market. As Alken-Maes had already done, Interbrew sent this statement to the Commission invoking the Commission notice on the non-imposition or reduction of fines in cartel cases(26).

(30) By letter dated 7 March 2000 Alken-Maes supplemented and clarified its statement of 27 December.

(31) On 22 March 2000 the Commission sent requests for information under Article 11 of Regulation No 17 to Alken-Maes, Haacht and Martens. Alken-Maes and Haacht replied on 5 April, and Martens on 6 April.

(32) On 3 April 2000 the Commission carried out an inspection under Article 14(2) of Regulation No 17 at Interbrew's offices in Leuven.

(33) On 14 April 2000 the Commission sent requests for information under Article 11 of Regulation No 17 to Danone, the parent company of Alken-Maes, and to Heineken NV, the Netherlands-based brewer. Danone and Heineken supplied the information requested in letters dated 10 and 11 May.

(34) In addition to the inspections and correspondence described above, a number of meetings took place in the course of the investigation between members of the Directorate-General for Competition and representatives of Interbrew, Alken-Maes and the CBB.

(35) On 29 September 2000 the Commission initiated proceedings in this case and approved a statement of objections addressed to the undertakings who are likewise addressees of the present Decision. All of the parties submitted written observations on the Commission's objections. None requested a hearing, and accordingly no hearing took place.

(36) On 21 December 2000 Interbrew supplied two further documents to complete the file on the case; they concerned two agreements with Alken-Maes concluded in connection with the other bilateral agreements between Interbrew and Alken-Maes. Alken-Maes and Danone were given the opportunity to comment on this letter from Interbrew and its annexes.

4. DESCRIPTION OF THE INFRINGEMENTS

4.1. Preliminary observation: the written evidence

(37) The account of the facts set out below is based on the evidence assembled from the information gathered at the inspections described above, from the replies to requests for information, and from the information supplied voluntarily by the parties.

(38) In the evidence available to the Commission there are frequent references to employees or former employees of the undertakings to which the proceedings relate. In the Decision these names have been replaced by indications of the positions held by those people at the time. Where, as a consequence, a quotation from the evidence presented here differs from the corresponding quotation in the statement of objections, a reference is provided to the relevant paragraph of the statement of objections for the benefit of the addressees of the Decision.

4.2. Introduction and summary

(39) The following recitals set out the facts of long-term and complex restrictive agreements relating to the Belgian market in beer for consumption both on and off the premises. Interbrew and Alken-Maes, the largest and the second-largest suppliers to the Belgian beer market, consulted together and concluded agreements concerning prices and promotions in the off-trade, the sharing of customers in the on-trade, the restriction of investment and advertising in the on-trade, and their pricing structures (section 4.3); they also shared information on their sales figures (section 4.4). They sought to take some of these measures further through the Confederation of Belgian Brewers (section 4.5). There was separate consultation and an exchange of information between Interbrew, Alken-Maes and the brewers Haacht and Martens concerning private-label beer (section 4.6).

4.3. The bilateral agreements between Interbrew and Alken-Maes regarding market shares and prices

4.3.1. Preliminary observations

(40) From the end of 1992 at the latest, and in any event up to and including the beginning of 1998, there was a succession of meetings and other forms of contact between representatives of Interbrew and representatives of Danone or of Alken-Maes, which was a subsidiary of Danone operating in Belgium. Most of these meetings between Interbrew and Danone representatives are irrelevant to this Decision, because they were concerned essentially with possible mergers and takeovers and with possible cooperation between these undertakings on markets outside Belgium.

(41) The description of meetings and other forms of contact set out below is therefore not intended to give a complete picture of all the contacts that took place between representatives of the undertakings concerned. It covers only those contacts which are relevant to this Decision and which are documented. Other contacts will be referred to only where this is felt to be necessary for an accurate account of the context in which the relevant and documented contacts took place.

4.3.2. The facts: chronology

4.3.2.1. The period from the end of 1992 until 1993

(42) Summary

At the end of 1992 and in the course of 1993 there was regular contact to discuss the off-trade, and agreements were reached regarding prices. There was also discussion of a reduction of marketing investments. Interbrew used the code name "Université de Lille" for this process(27). It was said that Danone wanted to widen the existing cooperation between Interbrew and Alken-Maes. Within Interbrew there was initially a reluctance to widen cooperation, motivated in part by the competition rules. In addition, Interbrew felt that as the market leader it was in a position to take certain decisions alone.

(43) On 17 November 1992 there was a meeting between representatives of Alken-Maes, Interbrew and Kronenbourg/Danone. At this meeting the new general manager of Alken-Maes was introduced to Interbrew(28).

(44) On 28 January 1993 Interbrew's manager for the off-trade in Belgium reported to Interbrew's general manager for Belgium on a "meeting with beer wholesalers"(29):

"After a great deal of talk we reached the following agreements:

- ITW and Maes will try to raise permanent promotion prices (the GIB retail chain's policy) as rapidly as possible from the present rate to BEF 285 initially and BEF 295 in a second stage ... [NB: This is doubtless the price of a crate of Pils],

- Promise not to pay for any promotion or advertising brochures for crates of Pils in the next three months if the minimum price is not complied with. Extension of this after a meeting in three months."

In its reply to the statement of objections, Danone stated that this meeting was a meeting between the brewers and the federation of beer wholesalers which took place on 28 January 1993.

(45) On 12 March 1993, in advance of a dinner with a representative of Danone (then called BSN), the interim Chief Executive Officer of Interbrew was informed in a memo from Interbrew's Executive Vice-President Core Market Beers Europe of the contacts that had taken place up to that time(30):

"There have been a few meetings between Mr ... [the chairman and general manager of Danone] and Mr ... [the previous CEO of Interbrew]. What transpired from those is the possibility of exploring closer cooperation ... Personally, I see Mr ... [the chairman and general manager of Kronenbourg, and general manager of Danone] through the Amsterdam Group a couple of times a year. The subject of 'cooperation' comes up now and again, however, there are some dangerous strings attached. I've discussed your meeting on March 16 with both our managers in France ... and in Belgium ...

3) Strategic area:

...

Belgium:

This is the trickiest part of your discussion. They probably want to increase 'cooperation' in Belgium. Mr ... forced us to talk as 'we needed some money', but we are most reluctant to do this as we want to avoid any problems under Articles 85 or 86 ...

Also, they have more to gain than we. I attach a memo showing what we have been talking about up until now, but so far, nothing concrete has been done. We are most reluctant to continue these discussions. I feel in Belgium, we should take the lead and make those decisions, others will follow if they are smart."

(31).

(46) The memo described as attached to the internal memo of 12 March 2000 is dated 18 February 1993; the subject is stated to be a "reduction of marketing spending with a view to improving our profitability in the short, medium and long term"(32). The code name used for this by Interbrew is "Université de Lille"(33). On 10 December 1992 and 19 January 1993 there were two internal meetings in Interbrew under this title(34).

(47) The memo records the following conclusions and recommendations:

"- Part of the cost of providing POS [point-of-sale] material to be transferred to wholesalers on a 50/50 basis, along with an increase in the price of glasses ...

- Advertising spending should ideally not exceed BEF 300 million in 1993, assuming that the largest competitor does not exceed BEF 140 million. This expenditure relates only to Pils, including NA [non-alcoholic] and Light ...

- Other parameters to be studied: costs of installation and maintenance of pumps, price policy in the off-trade, new pricing system ..."

(35)

(48) At the end of 1993 Interbrew's general manager for Belgium and the general manager of Alken-Maes met at the Duc d'Arenberg restaurant in Brussels(36).

(49) On 19 August 1993 the new CEO of Interbrew, who had previously been Interbrew's Executive Vice-President Core Market Beers Europe, stated as follows about the "93/94 Budget"(37): As far as the price increase is concerned, 4 % is a challenge ... Of course, we want you to do the 4 %. If you need help to convince Maes, let me know(38).

(50) On 2 November Interbrew's CEO had talks with the major retail chain [...]. The meeting is reported in a memo of 3 November 1993. The memo states as follows(39):

"[...] would appreciate an initiative on the part of Interbrew to make contact with [...] and [...] ([...] are the three largest Belgian supermarket chains) in order to arrive at a gradual increase in the price of beer and soft drinks to the level desired by ITW [Interbrew] ... If a consensus begins to emerge consideration will be given to the possibility of a three-way meeting ... I think it would be no bad idea if I was invited along to the top-level meeting with [...]. Only once initial contact has been established and an agreement is in prospect would I involve [Alken-Maes]. The initiative taken by Maes last year did not prove feasible: a) there was a lack of trust, but certainly also b) Maes was too small. This is something only ITW can do."

4.3.2.2. 1994

(51) Summary

In 1994 the contacts between Interbrew and Danone/Alken-Maes were extended. At a meeting on 11 May Danone put Interbrew under pressure: if the parties did not reach agreement in respect of the Belgian market, life would be made difficult for Interbrew on the French market. Interbrew did not accept Danone's demand that it transfer 500000 hl of beer to Alken-Maes, but it did not want war either, and the parties stayed in close contact with one another. At two meetings in 1994 the two general managers responsible for Belgium made preparations for a gentleman's agreement between the two brewers. Interbrew referred to this gentleman's agreement by the name "Université de Lille", although the new project went further than the process of the same name referred to in Interbrew's memo of 18 February 1993, which was aimed at reducing marketing spending (recital 46). The new agreement was confirmed at a meeting between the parties on 19 November 1994. On 24 November, as part of the cooperation between Interbrew and Alken-Maes, an agreement was concluded regarding the sharing of customers.

(52) At the beginning of 1994 Interbrew's CEO made the acquaintance of the new general manager of Danone's beer division(40). At their first meeting or meetings - there may have been a meeting in Amsterdam, and there certainly was one at Danone's offices in Paris - one of the subjects discussed was the adoption of a certain course of conduct on the market(41).

(53) At an internal discussion within Interbrew on 5 May 1994, Interbrew's CEO described a scenario requested by Danone/Kronenbourg(42). Interbrew was to transfer 500000 hl to Alken-Maes, essentially in the off-trade. Otherwise Interbrew would be annihilated in France, and an attack would be mounted on it in Belgium by means of very low prices(43).

(54) The scenario put forward by Kronenbourg was discussed by executives of Danone and Interbrew at the restaurant Le Roy d'Espagne in Brussels on 11 May 1994(44); Interbrew has its registered office at the same address, Grote Markt/Grand Place 1, B-1000 Brussels. There was probably also a representative of Alken-Maes present. The following came up for discussion(45). "[The general manager of Danone's beer division] repeated his demand that 500000 hl be transferred to Alken-Maes, and threatened that otherwise Interbrew would be destroyed in France. He wanted Interbrew and Alken-Maes to conduct themselves on the Belgian market in line with 'the agreements in France' ... The French mechanism can be summarised as follows. Heineken's and Kronenbourg's off-trade sales managers consult together very often in order to check their respective market shares and to manipulate promotions, prices and conditions"(46).

(55) A document from Heineken confirms Interbrew's statement regarding the relationship between the Belgian and the French markets and the proposals put forward by Kronenbourg/Danone. "Three years ago [the general manager of Danone's beer division] left Interbrew a choice: either they gave Maes an extra 500000 hl or he would drive them out of France. The form of cooperation that existed between Heineken and Kronenbourg in France was referred to(47)".

(56) The situation in France and Belgium was discussed again in a telephone conversation between the CEO of Interbrew and the chairman and general manager of Danone on 6 January 1994(48). In an internal memo from Interbrew's CEO dated 7 July 1994 we find the following(49): "I agreed yesterday with the 'Big Boss' of 'Green' [Danone] that we would not launch a war but instead try to gain time. Our objective is to arrive at a solution such as a marketing agreement for example, and to put the same thing into practice in Belgium. We will certainly stay in contact."(50) According to Danone the telephone conversation referred to was concerned with Interbrew's distribution efforts in France, but Danone documents confirm the existence of a non-aggression pact between Interbrew and Danone/Alken-Maes on the Belgian market(51). There is a reference to "July 94: peace with [Interbrew CEO] almost signed"(52) and "market shares justice of the peace"(53). The same documents also confirm the relationship between the agreements on the Belgian and French markets: "Peace in Belgium [harr ] Regional peace in France [rarr ] National peace."(54)

(57) At a dinner on 29 August 1994 a director of Interbrew met the general manager of Alken-Maes (55). The Interbrew representative states the following(56): "Although the on-trade was not discussed at the meeting in the Roy d'Espagne, once ... had become general manager of Alken-Maes he began to call me to suggest that we should align our conduct in order to keep control of the very big increase in investments needed to conclude on-trade beer supply contracts. I had various other conversations, mainly by telephone, with [the general manager of Alken-Maes]. He tried to set up a system of consultation to take place before pubs were bought or sold. I always refused. Against this background I had dinner with [the general manager of Alken-Maes] ... The result was my memo of 5 October 1994 to [the CEO of Interbrew] ... The discussion at the dinner did not go beyond generalities. I repeated that the 'French mechanisms' were not transposable to Belgium"(57).

(58) In the memo of 5 October 1994 this dinner with the general manager of Alken-Maes is reported as follows(58):

"1. He realizes that the situation in France and Belgium is very different and that what can be done in one country can not be done in the other.

2. He is under strong pressure from headquarters to pursue an aggressive marketing policy in Belgium which he fears will be costly and not necessarily efficient.

3. We agreed that discussion in the CBB on the Arthur D. Little Horeca 2000 project [see below, recitals 129 et seq.] also can be a good forum to study ways and means to reduce cost of doing business in Horeca.

4. We have communicated to him that he is the one who has become aggressive and that, particularly in the Food, we will react to his price actions, but we will not take the initiative."

(59)

(59) On 12 October 1994 Interbrew's new general manager for Belgium and the general manager of Alken-Maes met at the Sheraton Airport Hotel at Brussels airport(60). In a preparatory memo from Interbrew's marketing manager for the on-trade in Belgium to Interbrew's general manager for Belgium we read the following(61):

"1. Putting an end to expensive attacks

national customers sector ...

extremely difficult to draw a line, few rules or none

traditional on-trade

first of all a method has to be established ...

all dimensions of distribution agreements should be looked at:

a. investment policy

b. rebate policy ...

c. logistical measures

2. Reducing unproductive spending

sectors: publicity, pumps ...

A joint approach following on from the Arthur D. Little study could produce considerable returns for both parties. The two biggest brewers should be able to dictate the law here by laying down rules together with the beer wholesalers' federation.

...

4. General

- ... that the application of mutual agreements cannot be checked (or that any checks must be carried out by a neutral outside body, and in that case there is too great a danger that it will become known)

- using the CBB to achieve our objectives looks simpler to me."

(60) In an internal memo of 14 October 1994, on the subject of the "Université de Lille", Interbrew's general manager for Belgium reports on the meeting of 12 October(62): "Enclosed you will find a document from our friends as well as the one-page approach which I proposed. This was accepted by our friends in terms of principle"(63). The document in question originates with Alken-Maes, and gives an outline of the Belgian brewing industry and possible solutions to problems that have arisen(64). In the "one-page approach" referred to here by Interbrew's general manager for Belgium, we read the following(65):

"3. Gentlemen agreement:

- No attack of obligations [i.e. on-trade outlets with an exclusive purchasing agreement]

- Price-positioning food

- No systematic attack of brands in each other's obligations

4. Efficiencies/market dynamics

- Diminish unproductive spendings:

- P.O.S.

- Draught services

- Folder activities (no., % rebate, ...)

- Investments in Horeca (definitions?!)

5. Structural measures

Concentration of production

Marketing policies (pricing, BEF 20 ...)"

(66)

(61) Danone too was aware of this agreement. In an internal telephone conversation at the end of 1999 or the beginning of 2000 in connection with the inspection carried out by the Commission at the offices of Alken-Maes, reference was made(67) to a "94 agreement carrying the name of [the general manager of Alken-Maes]"(68).

(62) In an undated memo by Interbrew's general manager for Belgium in which these subjects are mentioned, there is also a timetable(69):"Project definition and gentlemen agreement 01/11, Market dynamics 01/02, Restructuring 01/04."(70)

(63) On 18 October 1994 there was a follow-up meeting between Interbrew's general manager for Belgium and the general manager of Alken-Maes(71). From notes kept by the marketing manager for the on-trade in Belgium, it is clear that "Université de Lille" was discussed at this meeting too(72).

(64) In an internal memo of 24 October 1994, Interbrew's general manager for Belgium summarised the discussion so far, and proposed other steps to Interbrew's CEO(73):

"1. Reply from Green [here Alken-Maes] to ITW-proposal

1.1. Pricing:

OK to establish key lager beers at same price and KRO [Kronenbourg] +- 5 % higher.

1.2. Gentleman agreement:

- limited to classical Horeca,

- not to: national accounts, presence of each others brands in obligations.

1.3. All other elements: OK

1.4. Further proposals:

...

- apply rebates to net prices [prices before excise duties, see in particular recitals 96 and 104 below],

...

small price increase in 1995.

..."

(74)

(65) Talks between Interbrew's general manager for Belgium and the general manager of Alken-Maes continued on 26 October 1994(75). On 7 November Interbrew's general manager for Belgium reported to the Interbrew CEO as follows(76):

"1. Basis of any agreement

Spirit accepted regarding respect of each others current position in the market ...

2. Program for profit growth

Basic agreement to work in 3 phases:

A. Priority 1

Pricing in the food to be established.

Maximum rebates or premiums for promotion to be defined.

Review POS materials & costs for Horeca.

Review investment in POS ...

...

B. Priority 2

Production rationalisation.

C. Priority 3

Restructure the market:

- tariffication,

- horeca investments,

- draught costs,

- etc ...

3. Next steps

04/11: Green [here Alken-Maes] to review program with superiors.

09/11: meeting with respective sales managers to:

- confirm overall spirit;

- define next steps for 'Priority 1' ..."

(77)

(66) The meeting which according to the memo of 7 November was planned for 9 November did in fact take place on that date. Interbrew was represented by its Belgian general manager, off-trade manager and marketing manager, and Alken-Maes was represented by its general manager and managers for the off-trade and the on-trade(78). A separate document sets out the "program for profit growth" referred to in the memo of 7 November 1994; some marginal notes have been added(79). These notes may well have been made at the meeting of 9 November 1994, and among other things describe a price agreement for the off-trade, showing the price of a crate of Pils at BEF 275(80); such a price agreement had been referred to under "Priority 1" in the memo of 7 November 1994. It is also noted that the points in "Priority 3" are to be implemented by the CBB.

(67) Interbrew's marketing manager for the on-trade in Belgium also made notes at or with reference to this meeting; the notes are dated 9 November 1994. Under the heading "Spirit" the notes mention "Creative competition - avoid direct attack - pay attention to other competitors - consultation"(81).

(68) On 24 November 1994 Interbrew's marketing manager for the on-trade in Belgium and Alken-Maes's manager for the on-trade discussed outstanding differences regarding individual sales outlets, and also "project Green"(82). In handwritten notes made at or with reference to the meeting, the marketing manager gives the following details of the agreement for the "traditional" on-trade(83):"It was agreed that drink supply contracts should be respected at all times. No new contract if the customer had a contract with more than two years to run, to give the present brewery the opportunity to secure a renewal first. No prospecting for speciality beers among customers that had Pils contracts with the competition (each to his own). No incentives to beer wholesalers to convert specialities by increasing rebates."

In the margins of the same notes the marketing manager has also made a few critical comments on the agreements. He remarks in one place that there is a danger that "someone else may run away with the business".

4.3.2.3. 1995

(69) Summary

In 1995 there was regular consultation between Interbrew and Alken-Maes (and Danone) concerning the implementation of the agreements concluded in 1994. The two brewers also began to consult regarding a new system of pricing for the on-trade and the off-trade(84).

(70) On 10 January 1995, at the Roy d'Espagne in Brussels, the general manager for Belgium and CEO of Interbrew and the general manager of Danone's beer division discussed relations between Interbrew and Alken-Maes(85).

(71) On 25 January and 10 February Interbrew's general manager for Belgium and the general manager of Alken-Maes discussed the status of "project Green"(86).

(72) On 30 January Alken-Maes's manager for the on-trade sent a letter to Interbrew's marketing manager for the on-trade in which he compared offers made by Alken-Maes with those of Interbrew. The letter states as follows: "I am forced to conclude that Interbrew has no real intention of acting to bring about a healthier on-trade market, since the spirit of what we have regularly discussed together - in the presence of our respective superiors, and at their express initiative - is manifestly being ignored ... I would be glad to have your reaction, in the hope that you might be able to clarify matters, and especially that you would want to prevent any repetition in future. It should be clear that little or nothing can be expected by way of results from our discussions in the CBB working parties if we see that even bilaterally we are unable to follow a sensible approach on the ground."(87)

(73) Relationships and agreements on the market were discussed once again at a meeting in Leuven on 18 April. Present were Interbrew's general manager for Belgium, marketing manager for the on-trade in Belgium, and manager for the off-trade, and Alken-Maes's general manager and managers for the on-trade and the off-trade(88). Interbrew's marketing manager for the on-trade in Belgium drew up a preparatory document, dated 14 April, summarising the relevant sectors, ends and means(89):

">TABLE>"

(90)

Notes made at the meeting show that there was talk of a ceiling on investment costs of [...] per hectolitre. At this meeting Interbrew and Alken-Maes also discussed the status of the CBB "Vision 2000" project (on this project see also recitals 128 et seq.)(91).

(74) At an Alken-Maes internal meeting on 15 May 1995, Alken-Maes's management controller announced that Interbrew intended to launch its new prices on 1 January 1996, and gave some details. He also said that Interbrew wanted to enter into contact with Alken-Maes in this connection, and that a meeting was planned for 18 May. The objective was clearly to work in the "same direction"(92). Alken-Maes now decided to speed up its own pricing study, and on 16 May an action plan was sent to a number of senior Alken-Maes managers(93).

(75) Interbrew's general manager for Belgium and the general manager of Alken-Maes met on 18 May(94).

(76) At an internal presentation of Alken-Maes's pricing study on 12 June, Interbrew's new pricing system was referred to; it was said that "the exact impact will be looked at together later (IB-AM)", and that "Alken-Maes must likewise have the first phase ready on 1 January 1996". One of the requirements for implementation on 1 January 1996 was said to be "being more or less on the same wavelength as IB"(95).

(77) A subsequent meeting between Interbrew's general manager for Belgium and the general manager of Alken-Maes took place at Interbrew's offices on 30 June(96). On 4 July the CEO of Interbrew had a telephone conversation with the general manager of Danone's beer division. From a preparatory memo drawn up by Interbrew's Executive Vice-President Western Europe, and the report on the conversation drawn up by Interbrew's CEO, it is clear that Interbrew believed it had complied with its agreements in Belgium(97): "We have respected our deal in Belgium"(98).

(78) In an internal memo of 12 July on the subject of "Pricing and logistics" (without Annexes), Interbrew's general manager for Belgium says "I believe it could be useful to discuss these prices with A-M. When would that be possible? Appointment set for 30 August"(99).

(79) On 28 August 1995 Interbrew's new general manager for Belgium, who had previously been manager for the off-trade, sent a letter to the general manager of Alken-Maes, which read as follows(100): "I would like to thank you and your people for your congratulations on my appointment as general manager for Belgium. You worked in excellent mutual understanding with [the previous general manager for Belgium], and I am looking forward to continuing with you in the same spirit. There are more than enough win/win opportunities, either direct or through a professional CBB, and good communication is a guarantee of success. Till 1 September."

(80) It was not on 30 August, therefore, but on 1 September that the meeting took place between Interbrew's former general manager for Belgium (who in August had been appointed Chief Operating Officer (COO) Europe/Asia Pacific/Africa), Interbrew's new general manager for Belgium, and the general manager of Alken-Maes(101). At this meeting the "exact impact" was "looked at" (see above, recital 76)(102). Three days later Alken-Maes's general manager reported on the meeting to the company's management controller(103).

(81) Around this time the brewers had to consider a request from the Belgian distributive trades federation, Fedis. Fedis wanted a payment known as a "sorting charge" to be made to its members, the multiple stores, for every crate of sorted empty bottles(104).

(82) On 26 October representatives of Alken-Maes and Interbrew agreed a response to Fedis's approach. The meeting was attended by Interbrew's new manager for the off-trade and its invoicing manager, and by Alken-Maes's management controller. According to Interbrew, Alken-Maes and Interbrew had been discussing this sorting charge with Fedis on behalf of the CBB, and were consulting with one another in that connection. From the notes kept by a member of Alken-Maes's staff who was present, however, it is clear that there had not been any meeting in the CBB framework, because it is noted that some measures are to be tackled via the CBB(105). Furthermore, Alken-Maes acknowledges that an agreement with Interbrew was discussed(106). There was a further meeting between Interbrew's general manager for Belgium and the general manager of Alken-Maes on 31 October(107).

4.3.2.4. 1996

(83) Summary

In 1996 there was intensive consultation between the brewers regarding pricing. Both brewers wanted a new system. They discussed the structure of a new pricing system and the direction taken by rebates.

(84) On 10 January 1996 Interbrew's general manager for Belgium and the general manager of Alken-Maes discussed pricing further(108). Alken-Maes states the following(109):

"Upon his return, [the general manager of Alken-Maes] explained Interbrew's position on pricing policy to [Alken-Maes's management controller]. [Alken-Maes's management controller] noted that there had to be 'an agreement in principle with Interbrew by 10 February 1996'. In a handwritten note, [the general manager of Alken-Maes] recorded that the pricing study had to cover three dimensions: logistics, pricing proper and marketing. A memo from [Alken-Maes's management controller] set up an action plan inside Alken-Maes, and identified the responsibilities of stated members of staff for each aspect of the study, so as to be able to respond quickly to the Interbrew initiative. It was also decided ... to introduce Alken-Maes's new prices no earlier than 1 January 1998, on the basis of customer behaviour in 1997.

There was doubtless another meeting between [Interbrew's general manager for Belgium] and [the general manager of Alken-Maes] in January or February. The notes kept by [the general manager of Alken-Maes] summarise Interbrew's position regarding price structure, rebates and logistics. In a memo of 15 February 1996 the consultant, Martichoux, summarised a conversation with [the general manager of Alken-Maes] concerning the progress of the pricing study at Interbrew.

On 1 March Martichoux presented its study to Alken-Maes; the study stated that agreement could be reached with Interbrew regarding the price structure and the timetable. The memo presenting the study also stated that an agreement with Interbrew would simplify the introduction of a future system. This presentation was followed by another on 15 and 16 April.

[The general manager of Alken-Maes] learned that Interbrew wanted to introduce its new system on 1 January 1997; [the general manager of Alken-Maes] asked [Alken-Maes's management controller] to speed up the implementation of the new system so as to be able to introduce it on the same date."

(110)

(85) The other meeting which according to Alken-Maes took place between Interbrew's general manager for Belgium and the general manager of Alken-Maes (recital 84) may have been the meeting in Leuven on 29 February 1996. Interbrew's Chief Operating Officer Europe/Asia Pacific/Africa was also present at that meeting(111). On 28 February 1996, the day before the meeting, he referred in a telephone conversation with the chairman and general manager of Heineken(112) to the existence of a "non-war agreement in Belgium"(113).

(86) A subsequent meeting on pricing took place on 24 April. It was attended by Interbrew's general manager for Belgium and manager for the off-trade, and the general manager and management controller of Alken-Maes(114). In connection with this meeting Alken-Maes states the following(115):

"The meeting discussed the merits of a graded tariff, a more transparent rebate policy, and the logistical aspects of the new pricing system. It appeared that Alken-Maes was a supporter of an open logistical pricing system, while Interbrew did not want to apply a transparent tariff to all its customers. According to the minutes of the meeting, drawn up by [Alken-Maes's management controller], the two competitors felt they would need to study the 'legal aspect' in the event that they were to 'begin together' on 1 January 1997 and the two systems were to 'resemble each other too closely.' An internal Alken-Maes document on the new pricing structure, dated 6 May, also refers to the discussions with Interbrew.

On 7 May [the general manager of Alken-Maes] instructed [Alken-Maes's management controller] to contact [Interbrew's manager for the off-trade] as a consequence of an agreement between [the general manager of Alken-Maes] and [Interbrew's general manager for Belgium], on the basis of which [Interbrew's general manager for Belgium] had invited Alken-Maes to acquaint itself with its [Interbrew's] price list. [The general manager of Alken-Maes] also told [Alken-Maes's management controller] that he would have to analyse Interbrew's system, and that Martichoux's help would no longer be required, since he wanted to use 'the same framework' and base himself on Interbrew's system."

(116)

(87) From the minutes of the meeting drawn up by Alken-Maes (preceding recital)(117), it appears that the new pricing system Interbrew wanted to apply was built on three components, or types of rebate: logistics, volume and individual (depending on the particular customer). Clearly there was agreement between the parties on a number of principles, such as that the rebate was to depend on volume, and that the purchase price paid by the on-trade was always to be the same as or lower than [...] (the rebate was always to be [...] % higher). There was also talk of dividing the speciality beers into categories, each with their own rebates, rather than a general rebate spread over all speciality beers bought. In its observations on the statement of objections, Danone argues that it is a fact of the market that the prices paid by beer wholesalers will always have to be [...] % lower than [...], because of the extra services that beer wholesalers provide to on-trade outlets. [...].

(88) As a result of this agreement between Interbrew and Alken-Maes, a meeting took place in Mechelen on 30 May 1996 between Interbrew's off-trade manager and Alken-Maes's management controller(118). At that meeting there was further discussion of the components of the pricing system already described, and of the manner in which customers were to be informed(119). [...].

(89) A number of documents date from the period between the meeting of 30 May and the next documented meeting on 29 June. Concerning these documents Alken-Maes states as follows(120):

"On 11 June 1996 Interbrew wrote to all its customers, including Alken-Maes, to advise them of the introduction of new general terms and a new pricing system with effect from 1 January 1997. On 26 June a presentation memo by Martichoux referred to contacts between Alken-Maes and Interbrew, and analysed the attitude Alken-Maes ought to take to Interbrew's new terms. An internal Alken-Maes memo dated 3 July, drawn up by [Alken-Maes's marketing manager], discussing the merits of delivered-to-premises and ex-factory pricing, referred to comments made by [Interbrew's manager for the off-trade] regarding Interbrew's new pricing system. On 5 July Martichoux made a presentation to Alken-Maes on the possibility of introducing an ex-factory price ... On 25 July Alken-Maes decided not to introduce an ex-factory price after Interbrew had abandoned the idea."

(121)

(90) The meeting of 29 July 1996 was attended by Interbrew's manager for the off-trade and Alken-Maes's general manager, marketing manager and management controller(122). From the notes of the meeting kept by Alken-Maes, it is clear that the rebate structure already mentioned was not the only subject discussed. There was also talk of a transitional arrangement to apply when the new terms were being introduced: "Guarantee: ... must be the same amount in 1997 as in 1996 (in absolute figures)"(123).

(91) On 19 September 1996 Alken-Maes decided to introduce its new logistical system with effect from 1 July 1997. On 27 November 1996 Alken-Maes decided to explain the new system by means of presentations to be organised with the help of Martichoux. Following on from the meeting of 19 September, Alken-Maes's management controller contacted Interbrew's off-trade manager, on 9 December, to ask a number of questions Alken-Maes had with regard to the pricing study(124).

(92) On 11 October Interbrew's Chief Operating Officer Europe/Asia Pacific/Africa sent a fax to a member of one of the families that owned shares in Interbrew. The subject was day-to-day relations with Danone/Kronenbourg/Alken-Maes(125): "We have been talking about a constructive competition in Belgium since one year now. Fundamentally nothing has happened. And most probably the responsibility for this is shared. We will try to restart this process in the following week"(126).

4.3.2.5. 1997

(93) Summary

In 1997 contact seems to have grown less intense, probably in part because Interbrew had introduced its new pricing system on 1 January. Alken-Maes ultimately launched its new pricing system some time after Interbrew, which had not been the earlier intention.

(94) Interbrew's new pricing system entered into force on 1 January(127).

(95) On 17 April Interbrew's Chief Operating Officer Europe/Asia Pacific/Africa and general manager for Belgium met the general manager of Danone's beer division and the general manager of Alken-Maes in Paris(128).

(96) Regarding this meeting on 17 April, the then general manager of Interbrew has stated as follows(129):"There were top-level meetings ... which I did not attend. After the top-level meetings we had 'instructions meetings' which we all attended (general managers and managers for the off-trade and the on-trade) ... The meeting in Paris on 17 April 1997 was just one of these instructions meetings with Danone (Danone was represented by [the general manager of its beer division]). We ('Belgium' and 'France', but each separately) were to report on synergies. At that meeting we went through profit and loss line by line, and systematically examined how costs could be lowered and profitability improved. Subjects discussed were: (1) production; (2) joint distribution platforms; (3) discounts on price to be given before or after excise duties (this was also a CBB subject); (4) marketing and investment in advertising ('share of voice'); (5) growth of the beer market, and methods of increasing volume ..."

(97) An internal Alken-Maes memo of 25 June reports on the actual implementation of the prices introduced by Interbrew on 1 January, and the departures from those prices observed in practice(130).

(98) In another internal memo, dated 4 August, Alken-Maes reviews the situation, and refers to possible difficulties with the Belgian beer wholesalers' federation in the event that it were to change over to the new system of pricing(131).

(99) By letter of 1 September 1997 Interbrew asked its customers for their cooperation in an evaluation of its new pricing system(132).

(100) In October Alken-Maes decided to introduce a new logistical pricing method. Up to the end of November it carried out simulation exercises for the new system of logistical and commercial pricing(133). Alken-Maes's management controller states that there was no further cooperation with Interbrew thereafter, i.e. after November 1997(134).

4.3.2.6. 1998

(101) Summary

At the beginning of 1998 there was a meeting between Interbrew and Alken-Maes to take stock of several years' cooperation. Achievements since the gentleman's agreement of 1994 were specifically detailed. After this meeting cooperation between Interbrew and Alken-Maes seems to have come to an end.

(102) On 1 January 1998 Alken-Maes introduced its new logistical pricing system. It launched its new commercial pricing system on 1 January 1999(135).

(103) On 28 January 1998 Interbrew's marketing manager for Belgium and the marketing manager of Alken-Maes met in Anderlecht in Brussels. The subject was the history of relations between Interbrew and Alken-Maes(136). Interbrew's general manager for Belgium and off-trade manager may also have been present at this meeting(137).

(104) The notes on this conversation kept by Interbrew's marketing manager for Belgium are as follows(138):

"1. Subjects

1. Organisation of consultations

2. Current issues

>TABLE>

3. General issues

2. Retroactivity 12 October 1994

- stop expensive attacks

- reduce unproductive expenditure

- stimulate beer consumption

achievements:

- rebates on price net of excise

- advertising credit vouchers adapted [see also recital 147]

settlement of old disputes

Pricing

joint issues

- maintenance of draught pumps

respect for other's ties

no aggressivity pact

- standardisation of packaging

not achieved:

- regulation of investment

- participation of other players

- outside advertising

The on-trade objectives

'respect for ties and supply rights

regulation of investment

attitude/action on practices of small brewers and private-labels ...'

3. Consultation on on-trade

- three times a year formal consultation with agenda

- direct contact over difficult issues and competition for national customers...(139)"

(105) On this point the then marketing manager for the on-trade at Interbrew states as follows(140):"The item dated 28 January 1998 is my notes of a meeting ... with ... the new marketing manager (on-trade and off-trade) at AM. He clearly knew nothing about the history. I had no further contact with AM thereafter, and nothing came of the meeting. In 1998 neither AM nor ourselves were under pressure from above, so nothing more happened."

The representative of Alken-Maes at that meeting writes(141):"As you know, I was always cautious and sceptical of Alken-Maes's biggest competitor. The few conversations referred to never led to any concrete results."

4.3.3. The facts: supplementary statements

(106) In addition to the facts relating directly to particular meetings or events, more general statements have been submitted regarding what happened in the period 1992 to 1998, both by Interbrew, or employees or former employees of Interbrew who played an important role at the time, and by Alken-Maes.

4.3.3.1. Individual statements

(107) Interbrew's general manager for Belgium, later Chief Operating Officer Europe/Asia Pacific/Africa states as follows(142):

"There were indeed regular contacts and meetings between ITW and AM/Kronenbourg/Danone. ITW's intention was to create goodwill for Danone, with a view to a merger or takeover of its beer business. The strategy rested on talk, lots of talk, and agreed measures that would allow value to be created jointly

...

Measures to contain aggression/cost explosion ('Université de Lille')

The initiative came from AM, and thus from Danone. We in Belgium wanted some kind of balance with France, where ITW was very weak. There was clearly blackmail in terms of the French market. We were afraid of retaliation in France. So we wanted to break the link with France structurally, by working AM loose from Danone. The issue was: what measures can we take to contain the cost explosion jointly:

- investment in pubs

- promotions in the off-trade.

This was followed up by the marketing departments, each with its opposite number. We met every two months to discuss progress.

We achieved very little by way of results.

In the on-trade, there were agreements on the 'national accounts' and on the restriction of investment, but [the marketing manager for the on-trade in Belgium] never succeeded in implementing them ...

In the off-trade, prices were set ([Interbrew's off-trade manager and later general manager for Belgium] with [Alken-Maes's marketing manager]), but these agreements were not complied with either ...

As regards the pricing system, I did not deal with that personally. I know there was consultation. The objective at one stage was to do it together with AM, but they were not ready. ITW went ahead, and AM followed ..."

(108) Interbrew's on-trade marketing manager for Belgium states as follows(143):"The term 'Université de Lille' originally stood for a form of market behaviour in which we were expected to behave like 'gentlemen'. We would compete, but we would not go too far. Much later it came to mean keeping market relationships in Belgium balanced with what was happening in France."

(109) Interbrew's manager for the off-trade, and later general manager, states the following(144):

"In the off-trade we achieved a lot, far more than in the on-trade, where admittedly little or nothing happened.

In the off-trade there were agreements on:

- rebates on promotions aimed at the consumer (e.g. 5 + 1 free)

- marketing issues (e.g. value of coupon at promotional events)

- advertising brochure frequencies (e.g. maximum 10 brochures for crates of beer at GIB).

[Alken-Maes's marketing manager] was also keen to see standardisation of packaging (joint responsibility for the standardisation project at the CBB).

That did not prevent us from being very aggressive on prices; competition was stiff, especially from 1994 onward. The Nielsen statistics are there to prove it."

And in answer to a request for clarification he adds(145):

"In the period (spring 1996) ... we were looking for better ways to employ our marketing resources in order to get our beer volume growing again.

Practical agreements:

- When we were promoting a multi-pack (a six-pack for example) we would limit ourselves to 5 + 1 free, rather than 4 + 2, [...]. For speciality beers the minimum was 3 + 1 (in a four-pack).

- At promotional events and tastings of our products in supermarkets and hypermarkets at weekends (openings, anniversaries) we would limit ourselves to giving a BEF 30 price coupon (= reduction at the check-out) ...

- In the same spirit, greater discipline was imposed with regard to inserts in supermarkets' advertising brochures and the minimum promotion brochure price (not shelf prices) (...) [...]. Advertising brochure prices were already aggressive (as low as BEF 249 for Maes), and we tried to avoid letting them fall any further, and to secure a minimum advertising brochure price from our customers."

(110) Interbrew's off-trade manager, who had previously worked in the Belgian direct distribution department, states as follows(146):"I learned that there were regular talks with Alken-Maes, and that they regularly called one another. When I asked whether this was in order legally, I was told by [Interbrew's general manager for Belgium] that this was not a problem. I was also told that it was part of a bigger Belgian-French story."

And in answer to a request for clarification, he adds, under the heading "Agreeing an off-trade plan for promotional pressure"(147):"As I explained earlier, there was discussion about pressure of advertising brochures (the number of folders in a given period), promotional price levels and number of free gifts. From memory, and to the best of my knowledge, in 1996 the subject was promotional prices. In 1997 the subject was the number of brochures, price levels and free gifts."

4.3.3.2. General statements

(111) Interbrew has admitted the existence of the following practices(148):

"Collaboration with BSN (later Danone) and/or Kronenbourg about competitive behaviour and cooperation on the Belgian market (as from about March 1993 to January 1998) ... including:

- concerted measures in Horeca (reduction of unproductive investments, reduction of advertisement spendings, draught services...),

- respect of each other's ties,

- market sharing in respect of national accounts,

- agreements on promotions in the food market,

- exchange of information about the structure of the new tarification system (1996)(149)."

(112) Alken-Maes has admitted being involved in the following at the end of 1994(150):"a pact providing for non-aggression, the reduction of marketing investment in the on-trade and in outside advertising, and concerted pricing. Proper implementation of the agreement seems to have been the subject of a procedure for regular consultation between the senior managers of the two companies."(151)

"Numerous meetings took place between executives of Alken-Maes, notably [the general manager], who was managing director between 1992 and 1998, and executives of Interbrew, especially [the successive general managers], at which there was concertation about the distribution and sale of beer in Belgium."(152)

4.4. Bilateral exchange of information between Interbrew and Alken-Maes

(113) Summary

From a large number of documents it is clear that Interbrew and Alken-Maes exchanged detailed sales information on a monthly basis(153). Alken-Maes and employees of Interbrew have stated that this exchange began at the initiative of Interbrew(154). According to both Interbrew and Alken-Maes, the exchange of information started no later than the end of 1991, on the basis of an oral agreement. The designated contacts at Alken-Maes and Interbrew exchanged the information by telephone(155). The information exchange system that operated between Interbrew and Alken-Maes assisted their implementation of the agreements described above (section 4.3).

(114) It is not clear exactly when the exchange of information began. The statements do not correspond. Some indicate that it began as early as 1989(156); but in any event the Commission has evidence that it started no later than the end of 1991. According to Interbrew, it began in December 1991, and according to Alken-Maes in November 1991. The first information exchanged concerned changes in total sales of Pils and non-alcoholic beer to the on-trade and off-trade together, in percentages, in November or October 1991(157).

(115) From April 1992 onward figures were also exchanged for volumes, and not just for percentage changes, for Pils, non-alcoholic beer and light (low-alcohol) beer. Sales were also broken down by distribution channel (identified by the English terms "food" (the off-trade) and "trad." ("traditional", the on-trade), and form of packaging ("barrels" and "others"). On 22 April 1992, for example, Interbrew's figures for March 1992 were circulated(158). These were followed by back sales figures for 1991(159).

(116) No later than October 1992 monthly information was being exchanged on sales by volume in all segments(160). Figures for September 1992 were circulated within Interbrew on 15 October(161). The time-lag of two weeks between the end of the month and the exchange of information in respect of that month was maintained until the exchange of information came to an end(162).

(117) From April 1994 the figures for Interbrew no longer include volumes brewed by Interbrew under licence and sold by other parties (that is to say the Carlsberg and Tuborg brands)(163).

(118) From 1997 the figures distinguish between the brands belonging to the brewers themselves and beer produced by them under distributors' own brands ("private-labels")(164).

(119) On 8 September 1997 a meeting took place between Alken-Maes's management controller and the marketing information manager and another marketing executive of Interbrew, at which the exchange of information was discussed(165). Regarding this meeting Alken-Maes states as follows(166):"on 8 September 1997, at the request of [Alken-Maes's general manager], [Alken-Maes's management controller] met [Interbrew's marketing information manager and another marketing executive of Interbrew] at the restaurant Le Roi d'Espagne in Brussels in order to consider the best way of showing sales of private-labels in the statistics exchanged every month between Interbrew and Alken-Maes. During the meeting the general segmentation of the data was also discussed. According to [Alken-Maes's management controller] this meeting followed Interbrew's entry into the private-label beer segment. Interbrew wanted to be able to monitor the movement of its share of sales in this segment, where it believed it could achieve the same market share as it had for sales of beer under its own brands."(167)

(120) From various documents it is clear that there was repeated telephone contact in order to optimise the exchange of information(168). At the beginning of 1999, for example, there was contact regarding a further breakdown of the figure for Pils by type of packaging. Initially agreement was reached between the marketing managers of Interbrew and Alken-Maes. But this oral agreement was never put into effect.

(121) By letter of 5 November 1999 Alken-Maes told Interbrew that "on 27 October 1999 we decided to stop notifying our monthly sales figures"(169).

(122) Interbrew's former general manager for Belgium states as follows with regard to the exchange of information(170):"As far as I can remember this system was set up by [the then general manager for Belgium] in 1992 ... The objective was to obtain faster and more accurate information for both the on-trade and the off-trade ... There were other statistics available on the market, but they were less reliable and also slower ... There were also the statistics we received from the CBB. But these were much slower, because they were only three-monthly. The figures were never discussed as such with AM. A general commentary on the trend was given from time to time. This was against the background of our agreement with [the chairman and general manager of Danone] that it was in our interest 'to approach the market calmly'. Thus we looked at these figures to consider whether ITW was doing well in a particular area, and AM less well, etc."

(123) In response to more detailed questions which the Commission put to Interbrew by fax of 21 January 2000(171), this statement was clarified as follows. To the question whether the exchange of information was used to monitor compliance with agreements with Alken-Maes, the answer was(172):"No. Although Kronenbourg had asked for agreements on market shares, no such agreements were concluded. Thus no monitoring was necessary. Nor did the fact that a general commentary was given mean that internal instructions were issued on the basis of the figures. These were commentaries on the figures. They were never linked to action."

(124) Interbrew's manager for the off-trade, later general manager for Belgium, has stated as follows(173):"I was aware of the system of exchange between ITW and AM. We looked forward to it, because it was practical and quick ... We sifted the information as carefully as possible in order to obtain good market intelligence. We knew our market share in Belgium to within a tenth of a percentage point. The information we obtained was very important. We looked at that information first, then at the CBB's figures, and then at Nielsen's, where they existed. For market estimates we used the exchanged information most of all. But the information did not influence any decisions. The big competitor was not AM but the private-labels."

(125) Interbrew has admitted(174) the existence of "Exchanges of information with Alken-Maes: total volumes of sales of beer on the Belgian market (December 1991); monthly exchanges on volumes for Pils and non-alcoholics (as from early 1992). As from October 1992 until November 1999: monthly exchanges of information on all segments (volumes)."(175)

4.5. The CBB meetings

(126) Summary

In the period from October 1990 to June 1997 there were numerous meetings of working parties in which the members of the CBB discussed the pricing structure and other joint measures. The meetings in question were primarily meetings of the Working Party on Pricing Structures, and its successors "Vision 2000" and the Market Policy Committee. On the Vision 2000 working party, the Market Policy Committee and the subgroups they set up Interbrew and Alken-Maes played a leading role.

(127) Up to August 1993 various discussions took place in the CBB's Working Party on Pricing Structures. In 1990 and 1991 the working party met about ten times. It seems to have been less active in 1992 and the first half of 1993(176). For most of this time the chairman was an Interbrew employee. Alken-Maes was represented by a sales manager(177).

(128) From the meeting held on 4 August 1993 onward, the Working Party on Pricing Structures was known as "Vision 2000". It consisted of Interbrew's manager for the off-trade, two employees of Alken-Maes, the marketing manager of Haacht, and an employee of the CBB(178). This first meeting under the new name discussed the harmonisation of the existing pricing structures for deliveries to the off-trade in Belgium and abroad. As regards the on-trade, it was agreed that rebates should be calculated in the same way as they were in the off-trade(179).

(129) The meeting of the working party on 15 October 1993 considered the possibility of having a study carried out in order to arrive at "a better understanding of possible future developments in the beer wholesale structure and the on-trade" and "to study one-off problems: parallel imports"(180). CBB documents of 9 and 12 November 1993 describe later tasks of the "Scenario 2000" project. The documents mention the following background factors among others:

"2. Opening of EEC borders

Consequence:

- changes in price structure

- parallel importing

- foreign interference.

3. Professional differences - Comparing Belgium with our neighbours the Netherlands and France

The stated objectives of the project include 'An understanding of present and future changes in beer wholesaling and the on-trade in Belgium, to enable us as brewers to develop our marketing strategy in the medium term.'(181)"

(130) The project was finally carried out for the CBB by Arthur D. Little. The study "Scenario 2000" compared the Belgian market with the Dutch and French markets, with regard to such things as pricing, the distribution system, investment in the on-trade and the profit margins of beer wholesalers in Belgium, the Netherlands and France(182).

(131) The Vision 2000 working party supervised the project. It met for the purpose on 17 January(183), 22 February(184), 24 May(185) and 25 August 1994(186).

(132) In the minutes of the CBB board of directors meeting on 21 September 1994, under the heading "Vision 2000", we read the following: "The chairman reminded the meeting that against the background of the opening up of borders and the growth in parallel trade, the board had decided to ask Arthur D. Little for a report on the pricing structure in Belgium and the neighbouring countries."(187) On 26 October 1994 the board discussed the Arthur D. Little report in more detail(188).

(133) From various documents it is clear that Interbrew and Alken-Maes, in the context of their bilateral contacts, acted together in the CBB and saw the advantages of taking certain initiatives through the organisation. According to an internal Interbrew document reporting on a meeting with Alken-Maes on 29 August 1994(189):"3. We agreed that discussion in the CBB on the Arthur D. Little Horeca 2000 project can be a good forum to study ways and means to reduce the cost of doing business in Horeca."(190)

(134) A number of other documents dealing mainly with the agreements between Interbrew and Alken-Maes make reference to the possibility that the two breweries might realise part of their joint objectives and agreements through the CBB(191).

(135) The results of the Scenario 2000 study were presented to the CBB by Arthur D. Little on 22 November 1994(192).

(136) The working party met again on 12 December 1994. The Arthur D. Little report served as a point of departure for further discussion. The meeting considered the role of the various players in the distribution chain, the associated returns and prices, and investment in promotion materials for on-trade sales outlets, which it was suggested should be based on purchases of beer in barrels(193).

(137) The working party met on 17(194) and 31 January 1995. At the 31 January meeting a number of subgroups were set up to look at six practical areas, including(195):

"...

4. Investment in publicity materials (glasses and beer mats)

(chairman: [Alken-Maes's on-trade manager])

Objective:

- to avoid competition in this area

- harmonisation

5. Management of delivered-to-premises and ex-factory pricing

(chairman: [Alken-Maes's general manager])

Objective:

- situation in neighbouring countries

- to 'finalise' the logistical charge

- to set standards for transport

6. Investment in sales outlets

(chairmen: [Interbrew's marketing manager for the on-trade in Belgium and Alken-Maes's on-trade manager])

Objective:

- practical recommendations

- problems and possibilities"

(196)

(138) On 25 January a more general document entitled "Vision" was circulated for discussion at the meeting on 15 February. The objectives of the working party were described as follows(197):

"To define the role of each link in the distribution chain

To define a framework in which each partner receives a fair price in proportion to the role it actually plays."

(198)

(139) In connection with the work of subgroup 5, which was chaired by Alken-Maes's general manager, a questionnaire concerning logistical arrangements was sent to Interbrew, Alken-Maes, Haacht, Palm, Silly and Moortgat on 16 February 1995, immediately after the working party meeting of 15 February referred to in recital 138(199).

(140) Subgroup 6, on investment in sales outlets, resumed the examination of the harmonisation of the level of investment in the on-trade which had been begun earlier by the Working Party on Price Structures. The subgroup secured the services of the consultant Opdebeeck(200).

(141) On 30 March there was another meeting of the Vision 2000 working party. From the reports made on the work of the subgroups it emerges that the plans of subgroup 4, on investment in publicity materials, were beginning to take practical shape, and that subgroup 5, on delivered-to-premises and ex-factory pricing, had suspended its proceedings to allow the members a period of reflection(201).

(142) The proceedings of the Vision 2000 working party were discussed at a meeting on 18 April 1995, at which Interbrew was represented by its general manager for Belgium, its marketing manager for the on-trade in Belgium and its off-trade manager, and Alken-Maes was represented by its general manager, its on-trade manager and its off-trade manager(202).

(143) The Vision 2000 working party met again on 7 July 1995(203). The meeting discussed the recommendations of subgroup 4, on investment in publicity material, and approved them unanimously. The most important recommendation was that the brewers ought to apply a standard investment of BEF 60 per hectolitre. The activities of subgroup 5, on delivered-to-premises and ex-factory pricing, were still suspended. In subgroup 6, on investment in sales outlets, there was agreement that investment ought to be rationalised jointly, but disagreement on the procedure to be followed.

(144) A new feature is that consideration was also given to the restriction of outside advertising. A separate subgroup was set up to look at this, chaired by the general manager of Alken-Maes. The report includes the observation "The measures referred to in this document can be considered only provided they are in line with Belgian and European legislation"(204).

(145) In July 1995 Alken-Maes received a copy of a memo presenting Interbrew's new marketing policy, which had been sent by Interbrew's off-trade manager to the CBB(205). The memo explains the current pricing structure at Interbrew and its disadvantages, and concludes that a new pricing structure is needed. The objective of the proposal is said to be "price competition at a higher level". It is also said to be a basic condition for success that "all Belgian beer suppliers work in an identical manner (CBB)".

(146) According to a statement by Interbrew's then manager for the off-trade, the memo referred to in recital 145 dates from 8 December 1994 and, after discussion with clients, was presented to the members of the CBB as well. Through this channel it also served as a basis for discussion in the CBB committees and elsewhere(206).

(147) At the meeting of the Market Policy Committee on 9 January 1996 the members confirmed once again that it had been decided that publicity material would be supplied on the basis of the number of hectolitres, no distinction being made between Pils and speciality beers, and that a proposal would be ready by the end of February(207). Interbrew's then manager for the on-trade in Belgium states the following(208):"A number of points was allocated per hl or per barrel. This conferred a proportional entitlement to publicity material. The question was also discussed in the CBB."

This system was known as the "publicity credit voucher" system (publicitair krediet bon - "PKB").

(148) The next meeting was on 12 March 1996. It emerged at this meeting that the Haacht brewery no longer wished to discuss investment in sales outlets or the development of a uniform system of calculation for that purpose. The report of the meeting urged that the working party on outside advertising be relaunched, in view of the possibility of securing efficiencies(209).

(149) The meeting on 23 May 1996 once again reviewed progress in all subgroups(210).

(150) The CBB Market Policy Committee met again on 9 September 1996. The progress of the subgroups was reviewed. In the case of the subgroup on investment in sales outlets, it emerged that only two of the original six brewers were prepared to continue. It is not known which brewers these were. In the light of previous history it is reasonable to suppose that the two brewers were Interbrew and Alken-Maes. The question was asked whether there was still interest in the working party, or whether it should be brought to an end. As regards the subgroup on investment in publicity material, it was observed that the project had been put to the CBB board of directors, and might be launched by 1 January 1997 at the latest. The subgroup considering outside advertising announced that it would be submitting practical proposals at the following meeting(211).

(151) The board of directors of the CBB met on 18 September 1996, and discussed the progress of the Market Policy Committee at some length(212).

(152) The Market Policy Committee met on 14 November 1996, and once again reviewed the progress of the various subgroups(213).

(153) The meeting of the committee on 5 February 1997 discussed various items, including the proposals on outside advertising. The objective was to arrive at common standards(214).

(154) The last meeting of the Market Policy Committee for which any evidence is available took place on 13 May 1997. It was stated that a decision had been taken on investment in publicity material, that Alken-Maes would be sending a letter to publicans on 1 July 1997, and that the other brewers would follow. The participants therefore felt that there was no need for the point to reappear on the agenda.

(155) As regards the questions that had been discussed in the subgroups looking at investment in sales outlets and outside advertising, it was noted that unanimity had not been achieved(215).

4.6. The private-label agreements(216)

(156) Summary

There were a number of meetings at which the market situation with regard to private-label beer in Belgium was discussed, and information exchanged. None of the parties deny that meetings took place. But the information supplied is contradictory. The details therefore cannot be established with absolute certainty. It is not even certain exactly how many meetings took place; but there were in any event no less than the four described below(217).

>TABLE>

(157) Interbrew's then manager for the off-trade, subsequently general manager for Belgium, who was present at the meetings, has stated the following(218):"There were also meetings between private-label brewers. This was at the initiative of [Interbrew's general manager for Belgium] and [the general manager of Alken-Maes] ..."

"The first meeting took place at the Holiday Inn in Diegem on 9 October 1997, on the instructions of [Interbrew's general manager for Belgium] ... The purpose of the meetings was to map out the private-label beer market in Belgium. The following data was supplied (example) [there follows an imaginary table, with the column headings:] product, volume, customer, type of contract, brewer, price ... I am not sure that the information provided for in the last column was actually exchanged, but that was certainly the intention. The object was that whenever there was a new invitation to tender there would be no undercutting of prices between the four brewers. The brewer who had the contract would bid his price, and the others would make a higher bid ... Because consultation stopped, no adjustments were made, except that Interbrew failed to bid for a particular Aldi contract. The Aldi contract was with one of the other brewers, from memory I think Martens ..."

"At the request of [the managing director of Martens], who also makes sales in the Netherlands, a meeting was convened between the four Belgian brewers and two Dutch brewers ... [The managing director of Martens] was prepared to go on talking in Belgium only if the same thing was done in other markets where Martens supplied private-labels, namely the Netherlands and Germany. Interbrew Belgium acted as a go-between here ..."

"The whole thing was stopped because the participants decided it was too dangerous."

(158) Alken-Maes, Haacht and Martens all say that the meetings were intended to discuss the sorting charge, that is to say a charge payable to retailers for handling empty bottles in crates; Haacht adds that they were also to discuss the growing importance of retailers' own labels and the bullying attitude of the big multiples(219).

(159) Haacht states as follows(220):"the differences between the prices of A-labels and private-labels was growing ... constantly greater, and there was an urgent need for an exchange of views on the situation with a few brewers in the Benelux."

On the meetings in the Netherlands:"we were not active on the Dutch market, and so we had no real interest. Information was exchanged on customers, packaging and volumes ..."

"The conclusion that came out of the meetings was that we should take a firmer line on prices, which were already being quoted very low, but this never happened, because the falling price spiral was not halted."

(160) According to statements made by Alken-Maes(221), "Each participant took his own notes of volumes, types of product and producers. As regards the Dutch market, any exchange of information was refused." At the last of these four meetings: "There was discussion of developments on the market in retailers' own labels in the big multiple chains. I [the marketing manager of Alken-Maes(222)] noted that there was a great deal of mistrust between the different firms at the meeting. My personal conclusion therefore was that the meeting was pointless."

(161) Interbrew has acknowledged(223) that it was a party to an "agreement on price level and market sharing in the private-label market (1997 to 1998)."(224)

5. THE PARTIES' WRITTEN OBSERVATIONS ON THE STATEMENT OF OBJECTIONS

5.1. Danone and Alken-Maes

(162) In its written response to the statement of objections Danone makes the following observations. Alken-Maes indicates that it wishes to be associated with Danone's view of the matter.

5.1.1. The bilateral agreements between Interbrew and Alken-Maes

(163) The supposed link with the French market

Danone argues, first of all, that the Commission accepts that Interbrew was being threatened by Danone in France even though it is not clear from the file that any investigation was carried out at the relevant time into the situation on the French market. This infringes Danone's right to defend itself.

(164) Danone in any event denies that it demanded that Interbrew transfer 500000 hl to Alken-Maes in 1994 and threatened that otherwise matters would be made difficult for Interbrew on the French market (recital 53). Danone submits that this allegation rests entirely on statements made by Interbrew employees in 2000 (recital 54). None of the documents dating from 1994 show that there was any such demand or any such threat. Danone considers that the Heineken document cited to confirm the Danone demand (recital 55) is of doubtful value as evidence, because the author and the context of the document are unclear.

(165) That no threat was made is in Danone's view also shown by the fact that Kronenbourg was in no position to drive Interbrew off the market. In addition, Interbrew's speciality beers Leffe and Hoegaarden were very important in France. In 1994 Danone brought pressure to bear on Alken-Maes to adopt an aggressive marketing policy in Belgium (recital 58), which according to Danone shows that it was acting competitively. Danone points out that it was in Interbrew's interest to preserve its dominant position on the Belgian market (recital 167 below).

(166) Danone submits that at the meeting on 11 May 1994 a Danone representative told Interbrew to put an end to its abuse of its dominant position in Belgium (recital 167 below), as otherwise Danone would take a tougher attitude to Interbrew in France. The reference was to parallel imports from France into Belgium and strict application of the French distribution contracts; according to Danone, Interbrew's speciality beers were at that time tolerated in drinks outlets that had an exclusive contract with Kronenbourg. Danone says that the figure of 500000 hl was mentioned by Alken-Maes at a meeting with Interbrew which took place in connection with the aggressive policy adopted by Alken-Maes. According to Danone, the reference was to the extra volume Alken-Maes needed in order to become profitable. There was no question of a demand made on Interbrew to transfer this volume to Alken-Maes. At the meeting with Danone on 11 May 1994 it was Interbrew that wanted to discuss the strengthening of its position in France, and thus Interbrew that sought to link the Belgian and French markets. Interbrew wanted to reinforce its position in France by taking over Danone's beer division, or sections of it, and by improving the distribution of its speciality beers. At the meeting on 11 May 1994 Danone's intention was merely to introduce the new general manager of its beer division.

(167) Failure to appreciate the abuse by Interbrew of its dominant position on the Belgian market

In the second place, Danone argues that account has to be taken of Interbrew's dominant position on the Belgian market. Not only does Interbrew have a 56 % share of the Belgian market, it also owns the best known beer brands; in six of the eight beer segments, the best-selling beer is an Interbrew brand. Since 1990 Interbrew has strengthened its position in the on-trade by taking over beer wholesalers, with the consequence that many other brewers are now dependent on Interbrew for the distribution of their products on this market. And since the beginning of the 1990s Interbrew has also expanded internationally, to the point where it is now the biggest brewer in Europe and the second biggest in the world. According to Danone, this international expansion was financed by Interbrew's strong position on the Belgian market. Danone submits that it was important to Interbrew that that position be preserved; following the aggressive price policy pursued by Alken-Maes from 1992 onward, Interbrew consequently took the initiative for talks with Alken-Maes.

(168) By virtue of its dominant position, Interbrew was able to decide what new pricing structure should be adopted by the industry as a whole. According to Danone, the pricing structure desired by Alken-Maes was rejected by Interbrew, and Alken-Maes had no alternative but to base itself on Interbrew's system. Interbrew then unilaterally decided to introduce its new pricing system on 1 January 1997, and by doing so imposed its chosen structure on Alken-Maes.

(169) Danone argues that during the relevant period Interbrew abused its dominant position. Danone submits that the Commission has acknowledged that Interbrew was guilty of such conduct, by initiating an investigation into the matter, but takes no account of it in the statement of objections. Danone considers that this is unfair, because the abuse helps to throw light on the relationships between Interbrew and its competitors, including Alken-Maes, in the relevant period. The Commission is therefore wrong to speak of pressure brought to bear on Interbrew by Alken-Maes and Danone with a view to concerted conduct on the Belgian market.

(170) According to Danone, Interbrew abused its position by offering beer at loss-making prices in an attempt to prevail upon cafés to break their exclusive contracts with Alken-Maes. At the meeting on 24 November 1994 (recital 68) Alken-Maes asked Interbrew to stop the abusive conduct, and in that context Interbrew and Alken-Maes agreed to respect one another's tied outlets. Alken-Maes repeated its request to Interbrew to put an end to the abuse in a letter dated 30 January 1995 (recital 72).

(171) Price control in Belgium

In the third place, Danone argues that account has to be taken of the price control system which required the undertakings concerned to apply for authorisation for any price increase. According to Danone, this in practice meant that brewers were required to consult each other regarding the prices of certain beers, and to document their cost structures in detail. The brewers were consequently aware of each others' cost structures and pricing policies, which they discussed together quite lawfully.

(172) The meeting with the beer wholesalers' federation on 28 January 1993 took place in this context, and the parties were therefore not aware that they were breaking the competition rules. At that time prices were still under the supervision of the state, and the brewers were awaiting the response of the Minister for Economic Affairs to an application for a price increase which had been submitted by the CBB. Because of the price control system, Danone and Alken-Maes were also not aware of the unlawful nature of the exchange of information between Interbrew and Alken-Maes.

(173) The initiative was always taken by Interbrew

Danone submits that Interbrew took the initiative in the various discussions and agreements with Alken-Maes. In November 1993 Interbrew took the initiative in increasing prices to the off-trade and asked Danone for Alken-Maes's help thereafter (recital 167). The meeting of 11 May 1994 was held at Interbrew's initiative (recital 166). In 1995, too, Interbrew took the initiative in the discussions with Alken-Maes on a new pricing structure(225). Danone argues that Interbrew likewise took the initiative in the exchange of information(226).

(174) No price or market-sharing agreements

Lastly, Danone denies that there were any price agreements or market-sharing agreements between Alken-Maes and Interbrew in the period 1993 to 1998. In 1993 and 1994 Alken-Maes and Interbrew did talk of putting an end to the fall in prices in the off-trade, but against a background of price control Danone argues that this cannot be regarded as a bilateral agreement on prices. According to Danone, the other discussions in 1993 were not concerned with prices but with the restriction of marketing investment in the on-trade. No price agreement was concluded at the meeting on 9 November 1994 (recital 66); the parties merely noted that distributors could not sell a crate of Jupiler, Stella or Maes Pils for less than BEF 275 without making a loss. Danone acknowledges that from October 1994 onward Interbrew and Alken-Maes consulted together regarding distribution systems in Belgium, and more especially distribution to the on-trade. Danone also acknowledges that in 1994 there was talk of a non-aggression pact in the on-trade, and that in the same year Interbrew and Alken-Maes were in contact regarding a limitation of investment in the on-trade and in outside advertising. According to Danone, discussion of the pricing structure for the on-trade began at the same time. But none of these talks had either the object or the effect of fixing the level of prices. In 1995, according to Danone, only the new pricing structure was discussed, and not prices or market sharing. The discussion of the pricing structure ended in July 1996, after Interbrew unilaterally decided to introduce its new structure on 1 January 1997. Danone submits that the Commission's evidence for the period from July 1996 does not show that there was any continuation of the practices at issue (recitals 91 to 105).

5.1.2. Meetings within the CBB

(175) According to Danone, the policy decisions taken in the CBB were guided by Interbrew. The subjects discussed in the CBB were Interbrew's main concerns of the moment: parallel imports, a new pricing structure, and the reduction of investment in the on-trade. Alken-Maes was also interested in the last of these issues. Danone argues that Interbrew employees held important positions on the CBB working parties at that time, and that the chairman of the CBB was the chairman of Interbrew's board of directors.

5.1.3. The private-label agreements

(176) Danone emphasises that when Fedis demanded that the brewers pay a sorting charge per crate for branded beer (recital 81), the parties decided to exchange their volume data so as to be able to respond. Fedis did not ask that this sorting charge should be payable on private-label beers, arguing that in view of the small volume of private-label beer there was no danger of "free riding". In the parties' view, the volume was greater than Fedis maintained and, as there were no reliable statistics, they decided to exchange their own volume and price figures. The exchange of information on prices may have had the effect that prices did not fall further.

(177) According to Danone, there was no formal non-aggression pact. Even if there was an implicit non-aggression pact, Danone argues that it had no effect. In addition, the private-label market was not mapped out in its entirety, as the foreign brewers refused to take part.

(178) Here too, Danone points to the important role played by Interbrew in the discussions. Interbrew was prepared to pay a charge of BEF [...], for example, which put the other brewers in a financially untenable position.

5.1.4. Penalties

(179) On the question of penalties, Danone argues that at the time of the infringement it formed a single economic unit with Alken-Maes. Danone does not deny that it took part in certain meetings concerning the Belgian market, and that as Alken-Maes's parent company it was aware of certain acts of which Alken-Maes now stands accused. Danone concludes that in accordance with the practice developed by the Commission in its decisions and with the case law of the Court of Justice, the Commission can impose only one fine, either on Alken-Maes or on Alken-Maes and Danone jointly.

(180) Danone refers to the practice of the Commission in its decisions and to the case law of the Court of Justice, and draws attention to the following mitigating circumstances.

(181) First, Alken-Maes, with Danone's approval, cooperated in the investigation, admitted the facts, and immediately put an end