The European Commission decided on Wednesday to fine Dutch brewer Heineken and two other companies a total of 274 million euros (370 million U.S. dollars) for their role in operating an illegal cartel on the Dutch beer market.
"It is unacceptable that the major beer suppliers colluded to hike up prices and carve up the market between themselves," the European Union's Competition Commissioner Neelie Kroes said when declaring the fine.
Four companies, including Heineken, Dutch beer maker Grolsch, as well as Belgian giant InBev and the privately owned Bavaria, were found to be participants of the cartel.
Heineken, who occupied half of the Dutch market, had to pay a penalty of 219 million euros, while Grolsch and Bavaria were fined 31.7 million euros and 22.9 million euros respectively. InBev was exempted from a potential fine of 84 million euros because the company helped investigation of beer cartels in several other EU countries.
The European Commission formally charged the four companies in September 2005 with fixing prices and dividing up the Dutch beer market among themselves at least between 1996 and 1999.
Evidence showed that in all four brewery groups high-ranking management, such as board members, the managing director and national sales managers, participated in the cartel meetings and discussions.
They even used code names and abbreviations to refer to their unofficial meetings held in hotels and restaurants, obviously to avoid detection.
"The highest management of these companies knew very well that their behavior was illegal, but they went ahead anyway and tried to cover their tracks," Kroes said.
Heineken said it was surprised by the commission's decision and intended to appeal against the fine once the company was informed of full details.
Shares in InBev and Grolsch traded lower following the news, while Heineken recovered from earlier falls.
The European Commission, on its own initiative, uncovered a cartel on the Belgian beer market in 2001, involving InBev. The Belgian beer maker, in exchange for leniency, provided information about its participation in cartels in other European countries, which led to surprise inspections on brewers in France, Luxembourg, Italy and the Netherlands.
It was for the third time this year that the EU antitrust watchdog handed down heavy fines against illegal cartels.
Nearly one month after ten companies making power generation equipment were fined 750 million euros in January, several lift manufacturers were given a combined penalty worth 992 million euros, the biggest ever fine imposed for cartel violations.
The total fines against illegal cartels levied by the European Commission amounted to 2 billion euros for the first four months of this year, which already surpassed the record figure throughout 2006. Last year, the total fines against cartels came to 1.8 billion euros.