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Danone loses bid to cut beer-cartel fine at EU court

Groupe Danone, France's biggest foodmaker, lost a final bid to cut a €42.4 mln ($55 mln) fine for a former unit's participation in a beer cartel.

Danone, the former owner of brewer Alken-Maes, was among several companies fined by the European Commission in 2001 – the regulator's first penalties in the beer market. A lower EU court cut the Paris-based company's penalty by €2.2 million based on the regulators' wrong assessment of the full amount.
Danone appealed again seeking to cancel or further reduce the fine. The European Court of Justice in Luxembourg, Europe's highest court, today rejected the appeal „in its entirety,” finding the lower court's judgment „consistent” with EU law. The commission fined Danone for Alken-Maes's participation in two beer cartels, one running from 1993 to 1998, and the other from October 1997 to July 1998.
The cartels involved fixing retail prices, limiting investments and advertising in hotels, restaurants and cafes and allocating customers in Belgium's private-label beer market. Former EU Competition Commissioner Mario Monti said the fact that Danone had been involved in other cartels in the past was „very serious.” In setting the fine, which totaled more than €91 million for the brewers, the regulator considered the gravity of the infringement, including its duration and past offenses. Danone rejected the commission's practice as unfair, arguing it would lead to a system of „everlasting repeated infringement.”

The court ruled today that it was within the regulator's „discretion” to consider past offenses when calculating the fines and that it „cannot be bound by any limitation period when making such a finding.” Lawyers for Danone, which sold Alken-Maes to Scottish & Newcastle Plc in 2000, argued at a court hearing in September that the regulator shouldn't be allowed to pull up cases going back several decades to boost fines.
The commission had unfairly used a cartel case as old as 32 years to raise Danone's fine by an extra €14.5 million, Danone's lawyer Antoine Winckler, who works for Cleary Gottlieb Steen & Hamilton LLP, told the court. The company will study the judgment closely, Winckler said by telephone after the ruling. The commission argued the cases involved the same executives during infringements discovered between the 1970s and the 1990s.
The lower court „was entitled to conclude that the repetition of unlawful conduct by Groupe Danone showed a tendency on its part not to draw the appropriate conclusions from a finding that it had infringed” EU rules, the court said today. (Bloomberg)