News broke that beer producers were fined for price-fixing in Germany.
In the end of August, I wrote about an alleged scandal of a German beer cartel: “The current scandal of illegal activity by German alcohol brewers is widening and has a European and global dimension. Surely decision-makers are provided a first hand example to see the real face of Big Alcohol…”
Just a few hours ago, the news broke that the German Bundeskartellamt has imposed fines on beer brewers totalling more than €106 Million.
The proceedings were triggered by an application for leniency filed by Anheuser-Busch InBev Germany Holding GmbH (AB InBev), on which no fine will be imposed in accordance with the Bundeskartellamt’s leniency programme. Investigations are still ongoing against two further brewery groups. The same applies to four regional breweries in North Rhine-Westphalia and their regional association for their involvement in a regional price-fixing group.
It means that AB InBev (brands: Beck’s, Hasseröder, Franziskaner) was involved in illegal activities, made profits off of them but avoids fines because it chose to step forward. Moral integrity surely looks differently.
The Bundeskartellamt has imposed fines totalling €106.5 million on the companies Bitburger Braugruppe GmbH (Bitburger – brands: König Pilsener, Wernesgrüner und Köstritzer), Krombacher Brauerei Bernhard Schadeberg GmbH & Co. KG (Krombacher), C. & A. Veltins GmbH & Co. KG (Veltins), Warsteiner Brauerei Haus Cramer KG (Warsteiner) and Privat-Brauerei Ernst Barre GmbH (Barre) as well as seven individuals personally involved on account of illegal price fixing agreements for beer.
The fines are far below the maximum limit: the guidelines of Bundeskartellamt allow fines of up to 10% of the annual turnover of the respective alcohol companies. Many within the alcohol industry had assumed higher fines of more than €200 Million.
Andreas Mundt, President of the Bundeskartellamt, says in their press release:
As a result of our investigations we were able to prove the existence of price-fixing agreements between breweries; most of which were based purely on personal and telephone contacts. The price increases of five to seven euros per hectolitre for draught beer in 2006 and 2008 were agreed on this basis. In 2008 a price increase was agreed for bottled beer with the intention of making the 20 bottle crates one euro more expensive.
In contrast to previous scandals and investigations, this time high-ranking top managers of the biggest beer producers could be found guilty of price-fixing.
The price-fixing schemes increased the price of beer to the advantage of the biggest producers and to the disadvantage of the retailers and consumers. It is in fact the biggest cartel in German history, with a “who is who” (as one news article wrote) of Big Alcohol involved. Together they control about 50% of the German beer market.
This news throws a spotlight on the slogan “Beer Serves Europe” thought up by the “Brewers of Europe” and reveals it for what it is: a a hoax. Beer serves the beer producers – and that’s why they in the business. Obviously, if illegal activity serves profits, they have no inhibitions to resort to unlawful acts to bolster their own profits.
Anheuser Busch InBev, Bitburger, Krombacher, Warsteiner are members of the German Brewers Association, that is itself member of the Brewers of Europe. It is crucial to keep this in mind, that many of these breweries are not only operating in Germany but are engaged in heavy and agressive lobbying of decision-makers in the EU and other countries around the world.
Therefore this scandal shows the hypocrisy of Big Alcohol: While they are fighting with all means possible the introduction of evidence-based policies that would increase the price of alcohol (for example through higher taxes) benefiting in a double-punch-effect lowering of alcohol harm and increasing the public health promotion budgets, they apparently have no problems illegally arranging prices only benefitting their own profits.
Big Alcohol often also argues regulations of alcohol protecting and promoting public health are detrimental to the free market and the free flow of (their) goods. The fines imposed today by Bundeskartellamt expose an industry that does not care for free markets. Big Alcohol is only concerned with any mechanism that increases and drives the maximization of its profits.
For background information:
Press release by Bundeskartellamt: First fines imposed…