Austrian market leader Brau Union under investigation for market abuse
Austria | The Federal Competition Authority (BWB) has confirmed that it carried out a search at Brau Union's headquarters in Linz at the beginning of April this year. The watchdog told the Austrian TV network, ORF, on 23 June, that it had received complaints against Brau Union for market abuse which warranted the search.
Brau Union is Austria’s major brewer with a market share of 58 percent. It has been fully owned by Dutch brewer Heineken since 2003.
Watchdog responds to complaints from wholesalers
The complaints were submitted by several regional beverage wholesalers. They said that Brau Union tried to pressure them to purchase not only its beers, but also its wine, spirits, and non-alcoholic beverages. The practice is known as “bundling”. The wholesalers turned down the “offer”, as this would have resulted in a loss of profits. Next, Brau Union allegedly threatened the wholesalers with no longer providing them with beer. Brau Union would self-distribute instead.
Market power in itself is not a problem, the watchdog said, but if the market leader uses its muscle and abuses its power, then it violates antitrust law.
“Serious allegations”
A Brau Union spokeswoman confirmed the search, saying that the allegations were “serious”. She emphasized that Brau Union is cooperating with the watchdog, as they want the matter clarified quickly. As Heineken is stock market-listed, however, she could not say more.
The benefits of a large portfolio
Brau Union enjoys a competitive advantage as it owns more than a dozen Austrian brands, next to Heineken, Desperados and Sol. It also operates a dozen or so breweries around the country, which creates an illusion of choice for consumers, as critics say.
Over the course of the pandemic, Brau Union managed to hike its market share to 58 percent, from 50 percent, not least thanks to a flurry of price promotions at the country’s two major retailers, Spar and Billa.
For comparison: the second ranked brewer Stiegl from Salzburg has an 11 percent share, followed by brewer Ottakringer from Vienna with 6 percent. The rest is shared by 290 small and medium-sized brewers.
Beer consumption in Austria has dropped to 97 litres per capita in 2021, from 121 litres in 1990. At the same time the number of breweries has shot up to 309, from 63 in 1990.
Watchdog has had its eyes on Brau Union before
The last time the competition watchdog went after Brau Union was in 2020, when Brau Union offered to buy the Fohrenburg brewery in western Austria. Although there was much opposition to the takeover, Brau Union got the green light eventually, as it saved the Fohrenburg brewery from pulling down the shutters.
Brau Union has long been criticised by other brewers for its aggressive market behaviour and for providing support to the on-premise in terms of kit, loans, and bank guarantees, that smaller competitors cannot afford.
For this reason, Austria’s private breweries joined forces in 2021 and launched an indie seal to differentiate themselves from big corporate brewers like Heineken. The initiative currently has 30 members, including all of Austria’s packaged beer brewers.
