Presidencia de la Nación

Cervecería y Maltería Quilmes: Federal Court confirms fine and ratifies CNDC’s recommendation

The Federal Civil and Commercial Court of Appeals upheld all measures aimed at re-establishing and guaranteeing competition in the market by dismissing Cervecería y Maltería Quilmes' appeal.

In August 2021, following an investigation carried out by the CNDC, the then Secretariat of Domestic Trade fined CMQ - Argentina's main brewer and distributor - 150 million pesos, based on the accreditation of an abuse of a dominant position of an exclusionary nature. The fine was complemented by the imposition of a set of corrective measures recommended by the CNDC with the aim of restoring conditions of effective competition in the affected market and preventing a repetition of the business practices that were sanctioned.

Among the taken measures - which were then all confirmed by the judgment of Chamber II which rejected CMQ's appeal - CMQ was ordered not to implement any type of formal or informal commercial agreement with points of sale -both those belonging to the on-premise and off-premise channels- whose purpose or effect is to generate vertical restrictions on the commercialisation channels with the aim of obtaining exclusive sales, making its products the first choice, eliminating competitors from the menus, or limiting the display of competitors' products through exclusive shelf space agreements.
Since 2006, Quilmes has been part of the Belgian-Brazilian group AB INBEV, and it is the leading producer, distributor and marketer of beer in Argentina. The market share of this group has comfortably exceeded 70% of the beer supply in recent years.

Through CMQ, AB INBEV, is a leader in both the on-premise channel (bars, restaurants, nightclubs, hotels) and the off-premise channel -mainly supermarkets, grocery stores and kiosks.
CMQ also includes other alcoholic beverages (ciders and wines) and non-alcoholic beverages (mineral water, soft drinks, isotonic and energy drinks, among others). Unlike its competitors, Quilmes has a high level of vertical and horizontal integration and a highly sophisticated logistical capacity for the distribution of its products.

Chamber II agrees with the CNDC both in the definition of the relevant market to which beer belongs and in the characterisation of CMQ as an undertaking with a dominant position in that market - the judgment states that this quality was “widely proven' by the CNDC. In addition, it agrees with the CNDC as regards CMQ deploying an anti-competitive strategy against its competitors in both the on-premise and off-premise channels, through aggressive loyalty policies aimed at obtaining exclusive marketing and allocation of shelf and fridge space for products.

Consequently, the Chamber ratifies the fine recommended by the CNDC and also endorses in full the measures ordered to CMQ to correct the distortions generated by its conduct in the Argentine beer market.

In addition to that, in February of this year, and based on complaints and evidence provided by different competitors of CMQ, the CNDC initiated an investigation and concluded that the brewing company was not complying with the corrective measures ordered and that the business practices for which it was sanctioned in mid-2021 had been extended over time.

Therefore, the Ministry of Commerce decided, at the request of the CNDC, to impose a daily penalty of 11,467 mobile units, to be calculated from 9 September 2021 up to and including 6 April 2022 - totalling 209 working days. The penalty therefore amounts to 2,396,603 mobile units. It is worth noting that, according to the current quotation of the mobile unit, the amount of the fine represents AR$ 389,567,817.65.

The CNDC will continue to closely monitor compliance with the corrective conditions set on CMQ in the marketing of beer in the on-premise and off-premise channels.


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