Ex-distributor reveals he was sanctioned by Brau Union

Austria | As Brau Union denies any wrong-doing and is in combat mood, it turned down the judge’s earlier offer of a settlement. Therefore, court proceedings over its alleged abuses of market dominance continued on 3 June. The first witness, a former beer distributor, raised the curtain and got things going.

The second-generation beer wholesaler explained Brau Union had “tolerated” that he also sold rival beer brands to his on-premise customers and event organisers. However, he had long felt an “economic pressure” not to neglect his partnership with Brau Union. At one time he was told in no uncertain terms that if he carried too many “alien beers” there would be “trouble”. The exact word was in Viennese lingo, which sounds cute, but actually translates as a threat.

This week’s court proceedings focused on how Brau Union, Austria’s major brewing group with a market share of 60 percent, cooperates with its logistics partners. Independent distributors act as logistics partners for Brau Union, but they can also sell others’ beers. Since Brau Union is a distributor, too, there is a potential for conflict.

A lot of arm-twisting

The distributor, whose name was withheld, specialised in supplying events and festivals with beer. During the covid pandemic in 2020, when all festivals were called off, disputes arose with Brau Union over terms. This led to the cancellation of his contract and he had to file for insolvency in 2021. Parts of his sizeable business were taken over by another distributor.

“I honoured the Brau-Union cooperation, but I also wanted to be an independent wholesaler,” he was quoted as saying. He constantly worried that he would be in Brau Union’s crosshairs if he sold too much “alien beer”. The presiding judge, Ramona Wieser, asked him which sanctions he faced. He replied that Brau Union had threatened to cancel delivery routes, or indicated that it would directly supply his newly acquired customers. He also remembered that a Brau Union sales rep uninvitedly walked into his warehouse to check on how much beer by other breweries he had stored there.

According to the competition watchdog, BWB, Brau Union has abused its dominant market position to restrict the market entry of other breweries and drive wholesalers out of the market. Amongst its specific accusation, the BWB alleges Brau Union bullied wholesalers, telling them that it would no longer sell them any beer if they did not also purchase its other beverages. Wholesalers were further obliged not to stock any alien beers and beverages. Failing that they were compelled to cover the majority of their product range via Brau Union. Brau Union, for its part, does not see any antitrust issues in its dealings with logistics partners and wholesalers.

Heineken suffers a setback

A few days previously, Brau Union had presented the watchdog with a draft contract for future cooperation with its beverage logistics partners. BWB will review the contract over the next four weeks. An attorney for Brau Union said they had “tried to clearly set out the existing practice” in order to prevent any possible misunderstandings.

Brau Union’s parent company, Heineken, suffered a setback in a secondary strand of proceedings. At the beginning of the year, Heineken had lodged a complaint, arguing that the BWB had resorted to unfair means during its investigations. In particular, Heineken had not been given sufficient access to the files. However, the Vienna Higher Regional Court dismissed the application and the Supreme Court upheld the decision.

Proceedings will continue in September.