The Superintendence of Industry and Commerce (SIC), as the sole competition authority, filed a statement of objections against Bavaria & CIA. S.A.S. (Bavaria) to determine if this company implemented a strategy aimed at obstructing the access or expansion of new competitors in the beer market.
According to the control body, the strategy would have consisted of a significant and disproportionate increase in the use of exclusivity clauses with commercial establishments dedicated to the sale of the product for direct consumption.
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With this strategy Bavaria would have obstructed the growth from its competitors in the beer market. The investigated behavior could have affected the consumers of the product, since it would have deprived them of the benefits offered by a competitive market with the entry and/or expansion of new competitors, more options, greater diversity of products and better prices for consumers”, assured the Superintendence of Industry and Commerce.
According to the Superintendent of Industry and Commerce, Andrés Barreto, the investigation covers behaviors adopted between 2017 and 2020, which were the subject of the complaints from Central Cervecera de Colombia.
The investigation began after the Superintendency received a complaint from Central Brewery of Colombia, that makes the Andean beer and markets other brands, and during the investigation the control body showed that Bavaria exponentially increased the use and application of exclusivity clauses as a reaction to the entry into operation of the production plant of Central Cervecera de Colombia, in Tocancipá.
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Similarly, the Superintendency found evidence suggesting that Bavaria’s intention was to obstruct the growth of that competitor, as well as that the exclusivities that Bavaria implemented would have achieved this result in some marketing channels.
According to the official, the restriction of competition is configured by mixing the excessive increase in these exclusivity agreements, which went from 33,000 to 88,000, with a marked position of dominance in the market, since Bavaria currently controls 92 percent of the market. brewer, a situation that prevents the shopkeeper who wants to withdraw from the agreement from being prevented from doing so.
Barreto added that although exclusivity agreements are not prohibited, as Bavaria is a dominant player and the number of these agreements increases, a conduct that impedes competition is configured.
Taking these conducts into account, the SIC charged Bavaria with having incurred in abuse of a dominant position, and charged José Luis González Quiroz, who allegedly collaborated, facilitated, authorized, executed and/or tolerated the abuse in which the company would have incurred.
According to the entity, fines of up to 100,000 million pesos could be imposed for each infraction of the free competition regime, and those who have collaborated, facilitated, authorized, executed and/or tolerated anti-competitive conduct, up to 2,000 million pesos per infraction.
Likewise, after the investigation there is the possibility that, in addition to a potential fine, an order will be issued to Bavaria requesting it to reduce the number of exclusivity agreements or other corrective actions.
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