The case investigates exclusivity agreements that could restrict competition among breweries.
On 11 October, the Tribunal of the Administrative Council for Economic Defense (CADE) signed a cease and desist agreement with Ambev to preserve competition in the Brazilian beer market. The agreement was signed under the administrative proceeding that investigates exclusivity agreements among Ambev and bars, restaurants, and nightclubs. This partnership could restrict competition by limiting access to strategic points of sale.
Accordingly, Ambev is required to limit the number of exclusivity agreements based on the following cumulative percentages:
- 6% of points of sale in each federal unit;
- 12% of sales volume under exclusivity agreements in each federal unit;
- 8% of points of sale in state capitals and municipalities with over one million inhabitants;
- 20% of sales volume under exclusivity agreements on state capitals and municipalities with over one million inhabitants; and
- 15% of points of sale in prime locations of São Paulo (SP), Rio de Janeiro (RJ), and Brasília (DF).
In addition to determining the proportions of points of sale and sales volume, the cease and desist agreement ensures that, by the end of the period of exclusivity, the points of sales are free to sell or sign exclusivity agreements with other firms. Thus, contracts are limited to five years and must not be renewed automatically, unless under exceptional circumstances. Lastly, the agreement determines that exclusivity agreements will not impose any financial penalty on points of sale for early termination of contracts. Additionally, it should not include preemptive rights clauses regarding any future points of sale, in favour of the signatory.
The Office of the Superintendent General considered the proposal and negotiation of the cease and desist agreement timely and suitable for the government, since it provides effective obligations to settle antitrust violations, saving time and public resources.
Understanding the case
The Office of the Superintendent General of CADE launched the administrative proceeding in March 2022 after Heineken Brasil claimed Ambev was abusing its dominant position in the beer market through exclusivity agreements in the on-trade channels segment, i.e. on-premise beer consumption like bars and restaurants.
On 29 September, CADE imposed an interim measure to prevent Ambev from signing new exclusivity agreements regarding the sale of beer to on-trade channels until the end of FIFA World Cup 2022 on 18 December.
The administrative enquiry must be suspended under the cease and desist agreement, which is expected to end on 31 December 2028. The investigation is to be dismissed in case Ambev complies with the agreement.
Source: Gov.br
