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25 August 2011
On September 28 2010 the College of Competition Law Prosecutors dismissed a complaint against brewer InBev Belgium NV which had been brought in March 2008 by Freedom CVBA, a purchasing association made up of several beverage wholesalers (for further details please see "Beer discounts and blurred boundaries: InBev complaint dismissed").
Freedom claimed that InBev was abusing its dominant position on the Belgian brewing and beer sales market by applying different commercial conditions, including different prices and discounts, to its on-trade customers (ie, hotels, restaurants and pubs) and off-trade customers (ie, shops and supermarkets). According to Freedom, the better commercial conditions enjoyed by the off-trade customers had led many on-trade customers to buy their supplies from off-trade outlets, rather than from on-trade wholesalers. Allegedly, this had blurred the distinction between on-trade and off-trade segments, which should be considered as belonging to a single relevant product market. Thus, it was alleged that InBev's differentiated commercial conditions could no longer be justified. In view of the volume of its purchases, Freedom claimed that it should be offered the same commercial conditions for bottled beer as off-trade customers.
The prosecutors acknowledged the essential importance of the definition of the product market. InBev's differentiated approach could not constitute an abusive discriminatory practice unless it was found that the on-trade and the off-trade constituted a single product market. However, the prosecutors agreed with InBev that the on-trade and off-trade segments still constituted different product markets, and that therefore the differentiated approach between on-trade and off-trade customers could not constitute an abusive discriminatory practice. Moreover, as there could be no finding of abuse, the prosecutors believed that there was no need for further investigation of InBev's position in the two markets concerned. Therefore, the case was dismissed.
Freedom appealed the decision. On April 29 2011 the Competition Council found that insufficient reasons had been given for the finding that no abuse of dominant position had taken place. The prosecutors had not sufficiently investigated or responded to Freedom's allegation that the differentiation in the conditions of sale of bottled beer could not constitute an abuse of dominant position. The mere delineation of two separate product markets was insufficient to establish that discriminatory pricing could not constitute abuse because the products were sold on two separate markets. Furthermore, InBev's market power should have been investigated to establish whether it had a dominant position. The case was referred back to the College of Competition Prosecutors for further investigation.
The council explicitly referred not only to the requirement that the prosecutors present adequate grounds for a decision to dismiss a complaint, but also to Article 45(2) of the Competition Act, which allows the prosecutors to dismiss a case purely on the basis of priorities and available resources. It appears that if the prosecutors decide to dismiss a case not for such reasons of policy, but on the basis of a substantive assessment, they must provide full and adequate grounds for their decision. Otherwise, they run the risk of having the decision annulled and the case referred back to them for further investigation.
For further information on this topic please contact Carmen Verdonck or Jenna Auwerx at ALTIUS by telephone (+32 2 426 1414), fax (+32 2 426 2030) or email (email@example.com or firstname.lastname@example.org).
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