O Administrative Council for Economic Defense (Cade) prohibited the ambev (ABEV3) to sign new exclusivity contracts for the sale of beer until the end of world Cup of Qatarwhich ends on December 18.
To the extent to which the Estadão/Broadcast had access, was taken as a precautionary measure by the counselor Gustavo Augusto after a complaint by the competitor Heineken that Ambev would be closing several exclusive agreements with bars, restaurants and other points of sale in order to exclude other breweries and limit consumer choice.
During this period, Ambev may renew or replace existing contracts with points of sale, provided that the limit of 20% of the number of bars, restaurants and concert halls in a given neighborhood or municipality is not exceeded.
According to market sources, however, Ambev’s dominance in this type of contract is still well below that level.
The limitation to this percentage will continue to apply even after the World Cup, as long as the preventive measure is in place.
The rules will also apply to Heineken in the federation units in which the brewery has 20% or more of market share.
Ambev currently has more than 60% of the beer market in the country, while Heineken’s share is around 20%.
The advisor also determined that the limit for exclusivity be observed in concerts, music festivals, fairs, cultural and sporting events and presentations. “Given the evidence analyzed, I believe that there is a well-founded fear that the exclusivity program of the represented company (Ambev) could cause irreparable or difficult to repair damage to the market and consumers,” said Augusto.
The measure also determines the immediate suspension of all contractual clauses of the contracts giving preference or any type of advantage to Ambev in the opening of future points of sales of the contracted.
Process paths
According to the legal director of Heineken, Sirley Lima, the decision is a response to an appeal to Cade from Heineken about the closing of exclusivity contracts by Ambev, which is a market leader.
The action was opened in March, but the General Superintendence of Cade initially understood that there would be no reason for a preventive measure restricting Ambev’s activities with bars and restaurants.
The decision now handed down by counselor Gustavo Augusto works as a kind of injunction and is a response to an appeal filed by Heineken over the Superintendence’s decision.
The change in the body’s positioning took place, according to the director of Heineken, after Cade heard other names in the market, such as Grupo Petrópolis and Estrella Galicia.
Although the decision of the competition defense body also cites Heineken, Sirley Lima stresses that the company would be willing to give up its exclusivity contracts throughout the country. “We have exclusive contracts in some regions, but it’s a defensive strategy,” she explains.
Although Cade’s own decision states that the total number of bars and restaurants on an exclusive basis with Ambev is no more than 4% or 5%, Heineken sees the practice as a threat: “Soon we would not have Heineken beer in regions from São Paulo and Rio de Janeiro”, said the executive.
For the president of the Brazilian Beer Industry Association (CervBrasil), Paulo Petroni, Cade’s decision that prohibited Ambev and Heineken from signing new exclusive contracts for the sale of beer until the end of the Qatar World Cup is a good sign. “We see with good eyes. Control bodies are shedding light on these abuses of economic power that are so damaging to the cold drinks market.”
Other side
Ambev informed that it received with total surprise the “monocratic decision” released today, after the General Superintendence of Cade concluded that there was no evidence to impose a preventive measure. “We will take appropriate measures. At Ambev, we respect Brazilian legislation seriously,” the company said in a statement.
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Source: Moneytimes
I am a journalist with over 6 years of experience working in the news industry. I currently work as an author for Global Happenings, and my coverage focuses on Technology news. I have written for various publications, including Reuters, The New York Times and The Guardian.
