Austrian Supreme Court issues hefty fine on grocer: a warning shot at Heineken?

Austria | The first day of hearings in the “Causa Brau Union” was held on 11 February at the Vienna Cartel Court. The Federal Competition Authority had applied to the court for the imposition of an “appropriate fine” over Brau Union’s alleged abuse of market dominance. Heineken’s Austrian subsidiary denies the allegations.

A few days previously, the Austrian Supreme Court had increased the fine originally imposed on the big retailer Rewe by the lower Cartel Court from EUR 1.5 million to a hefty EUR 70 million (USD 72 million). The fine followed what Rewe deems an error: It had failed to notify the Federal Competition Authority ahead of its takeover of retail space for a food retailer in a shopping centre in Wels in mid-2018. However, what Rewe considered a real estate deal, the watchdog classified as a takeover of a rival.

Large companies must notify the competition watchdog if they want to carry out a merger or takeover. This shall give the anti-trust body the opportunity to check whether it leads to greater market power. If no notification is made, the watchdog can apply to the Cartel Court for an appropriate penalty, which it did.

Many consider the fine excessive, not least Rewe, a leading German retailer (turnover: EUR 92 billion in 2023). It is also the number two grocer in Austria. But EUR 1.5 million versus EUR 70 million: One of the two judgements must be completely disproportionate. Either disproportionately low or disproportionately high. There is no other way to explain this extreme discrepancy.

Nevertheless, if the court wanted the judgement to serve as a deterrent it has probably achieved this.

Heineken watch out

The Rewe judgement is also likely to cause unease at another major firm. For months, the watchdog has investigated Brau Union, a Heineken subsidiary and Austria’s major brewer with a market share in excess of 60 percent, over accusations that it abused its dominant market position. Court proceedings began on 11 February.

The watchdog’s allegations against Brau Union are more serious than those levelled against Rewe. Amongst other violations, the brewer (whose brands include Gösser, Zipfer, Kaiser, Puntigamer, Schwechater, Reininghaus, Wieselburger und Schladminger) allegedly put pressure on wholesalers to not only purchase Brau Union’s beers but also its wine, non-alcoholic drinks and spirits portfolio.

Should the Cartel Court take action against Brau Union and impose an equally painful fine, Brau Union might have to pay up to EUR 3.1 billion, based on Heineken’s 2023 turnover of EUR 36 billion.

On another note: In a show of support, Dr Gabriela Straka, Brau Union’s former spokesperson and ESG executive, was voted “Best corporate spokesperson and communicator” by Austria’s media in January. She has won the award eight times in a row. Ms Straka’s sudden resignation from Heineken Austria in June made big waves as it came after the anti-trust authority had publicly accused Brau Union of competition violations.