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Local brewers still sour on Heineken

Four months after receiving the go-ahead from the Anti-Monopoly Office watchdog to purchase Slovakia's Martiner and Gemer breweries, Dutch beer giant Heineken is still facing accusations from locak competitors of unfair market concentration. But with official approval and an already solid Slovak presence from its ownership of popular brands Zlatý Bažant and Corgoň, Heineken's massive 40% market share does not appear to be going flat any time soon.
Western Slovak brewery Topvar, of Topoľčany, late in May filed a complaint in the Supreme Court asking judges to reexamine the monopoly office's decision on the merger. While the court has not yet handed down a decision, both Heineken and the Anti-Monopoly Office have maintained that the deal was fair and complied with all Slovak regulations and anti-trust laws, in addition to falling in line with those set out in western countries.


Topvar is the largest brewery in the country still in Slovak hands: The firm is angry at Heineken's dominance.
photo: TASR

Four months after receiving the go-ahead from the Anti-Monopoly Office watchdog to purchase Slovakia's Martiner and Gemer breweries, Dutch beer giant Heineken is still facing accusations from locak competitors of unfair market concentration. But with official approval and an already solid Slovak presence from its ownership of popular brands Zlatý Bažant and Corgoň, Heineken's massive 40% market share does not appear to be going flat any time soon.

Western Slovak brewery Topvar, of Topoľčany, late in May filed a complaint in the Supreme Court asking judges to reexamine the monopoly office's decision on the merger. While the court has not yet handed down a decision, both Heineken and the Anti-Monopoly Office have maintained that the deal was fair and complied with all Slovak regulations and anti-trust laws, in addition to falling in line with those set out in western countries.

But local competitors, rankled by Heineken's sudden dominance on what has always been a pluralistic market, have refused to be placated. "In Slovakia, we are trying to build up our market economy. If one company with 40% of the market share dominates in one market segment, the market will cease to exist according to the law of economic competition. The dominant player will set the prices, quality and level of provided services. Because of this we have objections to the concentration [on the market] of Heineken," said Topvar Director Peter Vendelin.

He added that the monopoly office's approval would probably not have been upheld if it had been decided strictly according to guidelines set down by the OECD (Organisation for Economic Cooperation and Development) or the EU - a claim immediately rejected by Ján Matuský, the Anti-Monopoly Office executive who oversaw the Heineken decision.

"For this case, I used all the methods used in the European Union and the standards of the Federal Trade Commission in the United States. I reached the decision that Heineken will not have a dominant position in the market," Matuský said.

He explained that during his decision process, he petitioned and received extra time beyond the month normally allotted to gathering all relevant information. Matuský used the extension to speak to the Ministry of Economy and the Association of Breweries, and to canvass the views of the Ducth firm's market competitors.

"It was a difficult merger because some of the competitors had many complicated questions for me and my lawyers, but I took all of the proper steps to ensure a correct verdict," he said. "For me, it was important to gather all the information available, and no one else has all the information I had access to due to my position. I was very careful with this case to get all the relevant information."

When Heineken purchased Martiner and Gemer, its total market share grew to 37.8%. At present, said Jean-Paul van Hollebeke, Managing Director of Heineken Slovakia, the brewer's share fluctuates around 40% on the back of the increased popularity of its Corgoň brand. Gemer and Martiner sales have remained stagnant as the breweries undergo initial quality control checks and Heineken carries out a series of upgrades.

In 1999, Topvar sold a record 588,000 hectolitres of beer and remains the largest Slovak brewery in local hands with a 12% market share; for the first four months of 2000 this figure rose to 13.4%.

Van Hollebeke said Topvar's stance was understandable, as it was in the nature of business for competitors to use any means necessary to beat out other players in the market. However, he explained that Topvar's grudge could be more deep-seated.

"For me, it is a little bit curious that Topvar is a little bit outspoken and trying to tell consumers that we are playing an unfair game. Part of the reason for this may be because they were praying to come into partnership with us, and now that they are not with us, they are trying to attack us in a way which is really not very professional," van Hollebeke said.

Van Hollebeke also rejected accusations that Heineken's deep pockets made for an unequal playing field. "We have to grow Martiner and Gemer organically, without any help from Amsterdam [Heineken's headquarters]. The only help that has come from Heineken Amsterdam has been in the financing of the breweries. But promotion and advertising are funded by the local profit margin, which is very low," he said. "At the end of the day, we feel that it is a consumer choice and not a 'brewer' choice. Everybody can produce good quality beer, but in the end, the consumer will decide to drink your beer or the beer of your competitor."

The Anti-Monopoly Office is in June expected to release guidelines on competition for all Slovak breweries. This, he said, will not have any impact on Heineken's purchase of Gemer and Martiner.

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