Fines totalling €304 million slapped on ‘drinks cartel’ of hypermarkets and suppliers

Six well-known hypermarkets and two suppliers have been slapped with fines totalling €304 million for operating a form of drinks ‘cartel’ which fixed prices on alcohol in a way that harmed consumers for many years.

The hypermarkets cited in a statement from the Competitions Authority (AdC) yesterday were Modelo Continente, Pingo Doce, Auchan, Intermarché, Lidl and Cooplenorte (owners of E.Leclerc outlets). The suppliers were the Sociedade Central de Cervejas (SCC), Primedrinks.

Modelo Continente received the largest fine (€121.9 million), followed by Pingo Doce (€91 million), Auchan (€22.3 million), Intermarché (€19.4 million), Lidl (€10.6 million) and Cooplenorte (€2 million).

Supplier SCC was ordered to pay €29.5 million, Primedrinks €7 million.

Beyond the ‘entities’, a director of Central de Cervejas was fined €16,000 and a business director within Modelo Continente €2,000.

Said the statement, the value of the fines was determined by the volume of sales and the years in which the ‘cartel’ operated.

According to the AdC, in competitions ‘terminology’ this was a ‘hub-and-spoke operation in which distributors used a common supplier to assure through this supplier that every hypermarket operated the same sale price to the public. This ‘guaranteed a generalised increase in sale prices to the public’ while at the same time avoiding ‘direct contacts’ between distributors and buyers. 

The AdC statement followed two specific cases – the first involving Modelo Continente, Pingo Doce, Auchan, Intermarché and Central de Cervejas, along with the two directors; the second involving the same supermarkets plus Lidl and Cooplenorte all agreeing the same prices through alcoholic drinks supplier Primedrinks.

In the first case, says the competitions authority, the cartel operation ran for “more than nine years, between 2008 and 2017 – fixing prices on beers like Sagres and Heineken, but also on other drinks like Bandida do Pomar and even Água do Luso (water!).

The second case centred on wines produced by Esporão and Aveleda, Famous Grouse and Grant’s whiskies, Henrick’s gin, and Stolichnaya vodka. This operation seems to have run for over a decade, between 2007 and 2017. It was particularly ‘fixed’ to see prices creep relentlessly upwards.

These have been the first ‘convictions’ handed out for the concerted practice of indirect price fixing between distributors in collusion with suppliers – and they are extraordinarily damning.

The AdC didn’t stop short with a statement. It actually cited incriminating emails found during the course of its investigation (which began in 2017). One from the Central de Cervejas read: “This is exactly the objective. Increase prices!! Keep going!!”

Primedrinks however has said it doesn’t ‘see itself’ as a villain in any way, and will be ‘appealing’ against the decision “to restore (its) good name”.

Sonae (overlording the Modelo Continente chain) has been equally ‘appalled’ by the censure, “rejecting absolutely” that it took part in any kind of illegal practice that could have harmed consumers.

What is curious is that the other chains haven’t yet pronounced, or even expostulated righteous indignation, while Central das Cervejas’ response has been relatively meek.

Said SIC television news: the Sociedade Central de Cervejas e Bebidas (SCC) has shown itself to be “disappointed”.

A statement from the company has stressed that it will now be “studying in detail the globality of the decision as a way to determine our next steps”.

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