Retailer Edeka and AB-InBev shadowboxing over listings
The German beer cartel was not just a horizontal one, involving several brewers, it was also a vertical one including large German retailers.
In December 2016, the German trustbusters fined retailers Edeka, Metro and others a total of EUR 112 million for collusion between 2006 and 2009. This comes after several German brewers were fined a total of EUR 340 million in 2014 for price fixing.
In both cases, AB-InBev acted as whistle-blower. In exchange for not getting penalized, AB-InBev told the authorities that it had also coordinated price increases for its beers among retailers, thus preventing them from launching bargain prices over a pre-agreed period of time. The authorities said this meant that consumers had to pay more for their beer than would have been necessary had price competition not been disabled.
The irony is that despite the cartels, beer prices in Germany must be among the lowest in the world. You can buy a crate of even major beer brands for under EUR 10 (USD 10.7) per 10 litres at almost any time.
Convicting the retailers was made possible because another group, Rewe, had grassed on its competitors. It also went scot-free, although the whistle-blower pardon is usually suspended in vertical cartel proceedings.
A cooperative of independent retailers, Edeka is Germany’s leading supermarket group. With a turnover of EUR 24 billion (USD 25.7 billion) in 2015, it enjoys a market share of 26 percent.
As can be imagined, Edeka was not pleased having been handed a fine which would have been significant, running into the tens of millions euros. Retaliating in kind, it decided to de-list AB-InBev’s beers (Beck’s, Hasseröder, Franziskaner). Potentially, this could wipe about 35 percent or 2.5 million hl of AB-InBev’s 2017 sales, according to estimates by INSIDE, a German trade newsletter.
But things are never as bad as they seem. Insiders think that the effect on AB-InBev’s volume sales will be much smaller, amounting to perhaps 5 to 10 percent. This is based on the assumption that Edeka’s biggest regional units will probably continue to sell AB-InBev’s beers although they may refrain from putting them on promotion (which will reduce sales), while Edeka’s rivals will hike their promotional activities for AB-InBev’s brands to bring more traffic through their doors.
The shadowboxing between Edeka and AB-InBev could drag on for half a year, but eventually both parties will sit down again and work on a sane solution.
