EUROPEAN FEDERATION OF ASSOCIATIONS OF BEER A N D BEVERAGES WHOLESALERS

Membres

Belgium France Germany I taly Luxemburg The Netherlands Portugal Switzerland

Brussels, 25 September 2009

European Commission Directorate-General for Competition Antitrust Registry Ref.: HT.1171 – stakeholder input

1049 Brussels

Dear Sir, Madam,

I n our capacity of legal representative of Cegrobb, the European Federation of Associations of Beer and Beverages Wholesalers, we consulted the professional federations of the member states of the European Union extensively about their position concerning the new competition rules applicable to vertical agreements.

First of a l l , we would like to situate t h e f u n c t i o n o f t h e i n d e p e n d e n t w h o l e s a l e r s o f b e v e r a g e s : they are situated between the producers and an establishment of the catering industry. Furthermore, they guarantee a wide spread movement and a supply to the zones with less population and they offer a whole range of competing products, and thus guarantee a diversity to retailers a n d , consequently, a wider choice to the consumer. These often make an appeal on their wholesaler to obtain a financial a i d , which the banks aren’t will ing to give. Without these investments, there wouldn’t be a catering industry. The wholesaler in beverages is furthermore the specialist in the keg market, thanks to his knowledge and the training he gives to his staff for the cleaning of the pipes and taps and the maintenance of cooling facilities.

Having said th is, we concluded that , in general, these new rules have nearly the same content as the current rules, operational f r o m January 1 s t , 2000 unti l May 3 1 s t , 2010.

Therefore, as European federation of wholesalers in beers, waters, soft drinks and other beverages, we have 1 0 years of experience with these rules on the European market of beverages and we can inform you that Cegrobb is in general very satisfied with these rules, and this for the following reasons:

1 . They maintained in Europe a sound and honest competit ion. This also for the benefit of the consumer, because during this period of ten years, the prices of beverages remained in general relatively low and allowed to maintain an appreciated service for the consumer.

Cegrobb

!+32-2.410.33.47

boulevard Edmond Machtens 83 b1

β +32-2.410.35.45 e7cegrobb@febed.be

1 0 8 0 B r u x e l l e s

www.cegrobb.org

CEGROBB 2 . The trade between different member states was boosted by the existing rules

and regional specialities are now being sold in the different European countries.

3 . The mechanism of the market barriers, that gives to the small and very small businesses more contractual f reedom, has as result that the existence and the sound development of the SME’s and small breweries is ensured.

Nevertheless, we would like to make some remarks here on the following points:

A r t i c l e 2 , p a r a g r a p h 4

I n the amended version, in paragraph 4a, the existing alternative of a low level of turnover on side of the buyer (not exceeding 100 mill ion €) is completely el iminated. The possibilities of exemption deteriorate, especially for small and medium sized businesses, due to the fact that the alternative provided in article 2 paragraph 4b can only be applied between producer and trader, but not in between trade levels.

Our members’ companies are affected by this due to their secondary activity as producer, for example in case that they run a brewery or mineral well or that they stock their own brands.

T h e r e f o r e , w e ask t h a t t h e a r t i c l e 2 p a r a g r a p h 4 a o f t h e c u r r e n t v e r s i o n w i l l n o t b e e l i m i n a t e d .

A r t i c l e 3

I n the draft , the differentiation of providing and obtaining markets in regard to calculating the market share barriers is enjoined, additional to demanding the exemption f rom complying wi th the market share barrier of 3 0 % of both the providing party as well as the receiving party.

Paragraph 2 was eliminated, according to which an exemption was possible in case of vertical agreements which contain agreements on exclusive supply, if the buyer’s share in the relevant markets did not exceed 3 0 % . This provided the possibility for small buying companies to demand, for example, territory or customer protection f rom large, powerful suppliers. Those demands met the legitimate interest of the buyer, for example in cases of tapping a new market or introducing a new product, thus in cases in which the buyer faced an exceptional economic r isk.

According to the amended version, this would no longer be possible in case the powerful supplier holds more then 3 0 % of the market shares. The introduction of an additional condition connected to the market share of the buyer, can lead to an unjustif ied exclusion of the benefit of the exemption regulation, which constitutes a “safety zone” for the enterprises in the sector of the wholesalers in beverages.

As a r e s u l t , t h e m a r k e t e n t r y o f s m a l l compan ies w o u l d b e h i n d e r e d .

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CEGROBB Furthermore, the notion of relevant market is different from one state to another. Cegrobb thinks it is necessary to harmonize the definition of relevant market in the European Union. If the relevant market isn’t clarified, the legal uncertainty is strong, namely concerning the limits of the market share imposed on the buyer in the draft. Thus for instance the interpretation given in France by the national authorities of competition leads to a complicated and not very realistic definition (regional markets, distinction between product types).

We therefore ask that the guideline foresees that the policy of the nat ional authori t ies of compet i t ion can be submit ted to the opinion of the Commission, because according to the v iew of the involved part ies, i t w i l l lead to unnecessary restraints.

Art icle 4

Article 4 sub a

We see that the commission keeps the possibility for the supplier to set a maximum price. I t isn’t clear why this stipulation is in the text. The supplier has many other means to stimulate sales through his retailer. Moreover, the market has on this point a large self regulating power. The consumer calculates his purchases carefully, where he has different means to his disposal. We therefore ask that the possibility for the supplier to impose a max imum price is removed f rom the guideline so the market can do his job.

Article 4 sub b

• Article 4b, third bullet point in the previous version did not contain the addition “in markets in which such system exists”, as the amended version does. This addition however was covered in recital 52 of the Guidelines for vertical restraints which comments on the three exceptions of article 4b block exemption regulations. Therefore, we perceive the amendment of article 4b, third bullet point as a mere clarification.

• In the numbers 51-54 of the guidelines, the Commission describes the possibilities to restrict the active sales in case of using the internet. The Commissions stipulates that the restriction of sales can’t go to the extent that the passive sales will be excluded or limited. I t is however difficult to draw the line between passive and active sale. In our trade it often happens that kegs of beer are offered on websites at very low prices, to which no retailer can supply. Although this principle falls under the definition the Commission gave to passive sale, the result is comparable to the active approach of customers. After all, this news spreads rapidly amongst the buyers (the catering industry), or through mouth-to-mouth advertisement or through blogs or other means of communication of the catering industry owners.

To guarantee a certain legal security t o the companies, i t is imperat ive to define w i t h precision these t w o not ions i n the draf t of the regulat ions and to give concrete examples in the draft of guidel ines.

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CEGROBB Guidelines nrs. 150, 175, 1 8 4 : Collusion between suppliers in case of cumulative practices

The Commission describes in various places in the guidelines that there is talk of a cumulative effect of combined market canvassing through individual retailers in case of selective and exclusive distr ibution. We regret the fact that the text doesn’t conclude that there is no unacceptable disruption in case of combined market canvassing, when there is no selective or exclusive distribution going o n . I n this case, retailers should be able to work together to obtain scale benefits, e.g. release combined brochures and organise sale fairs.

4 . Finally, thanks to these rules, we were able to develop our function of distribution platform for national and European brands f rom the different member states.

Conc lus ion

Given the experiences we had in the past wi th these rules and the fact that the new rules are based on the same principles, we adhere to the new rules, bearing in mind our remarks developed above, and we thank you for the important work and the European vision you stipulate in these rules.

We are of course entirely at your disposal, should you have any further questions or need further information.

Sincerely yours,

Philip Schraven, President

PS: this letter was also send by e-mail

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